Presented below are selected account balances for Blue Co. as of December 31, 2020. Inventory 12/31/20 $60,260 Cost of Goods Sold $223,793 Common Stock 73,760 Selling Expenses 15,746 Retained Earnings 45,260 Administrative Expenses 38,647 Dividends 17,810 Income Tax Expense 29,630 Sales Returns and Allowances 12,207 Sales Discounts 15,210 Sales Revenue 416,460 Prepare closing entries for Homer Winslow Co. on December 31, 2020.

Explanation:

The closing entries for the following accounts are given below:

1. Sales Revenue A/c Dr $416,460

                    To Income Summary $416,460

(Being revenue account closed)

2. Income summary A/c Dr $335,233

              To Sales Returns and Allowances A/c $12,207

              To Sales Discounts A/c $15,210

              To Cost of Goods Sol A/c $223,793

              To Selling Expenses A/c  $15,746

              To Administrative Expenses A/c $38,647

              To Income Tax Expense A/c $29,630

(Being expenses accounts are closed)

3. Income summary A/c Dr $81,227  ($416,460 - 335,233)

             To Retained earning $81,227

(Being the difference is credited to retained earning)

4. Retained earnings A/c Dr $17,810

                  To Dividend A/c $17,810

(Being dividend account is closed)

Hi there!

Before we find an answer, let's gather some information.

Information:

First, let's figure out what "motives" means.

- Motives means something that is done for a reason / doing something for a reason/purpose.

- Motives is important to this problem due to us needing to find out what motives of a business is the correct answer.

- When solving this problem, we are looking for an answer that a business would be doing for a reason or purpose.

Problem-Solving:

A. A is incorrect, as a business owner you want to satisfy people, but that's not the only thing you want out of a business.

B. As a business owner, you of course would want the economy to grow, but I'm positive that wouldn't be your goal!  

C. C wouldn't fit here, we are looking for more as as business person.

D. D would be the correct answer, to stay a business owner, you need profits in the form of goods or services.

Answer explanation:

How is "D" correct?

Back in our information box, we defined "motives", when doing a business you want to get profits, you are doing a motive to do get profits. And one way to get profits is having good form of services and goods!

Therefore, we can conclude that "D" is the answer.