Morrill Law Offices Had the Following Transactions in November,2012

question 25

Essay

Morrill Law Offices had the following transactions in November,2012.Prepare closing entries followed by an income statement for Morrill Law Offices for the month ending November 30,2012.
1.Morrill Law Offices sold $210,000 worth of services.Two-thirds was collected in November with the remainder collected in December.
2.The company paid wages of $53,000 to its employees.
3.The company paid utilities of $750 to Brenton Electric Company.
4.The company's prepaid rent account expired in the month of November.Morrill Law Offices purchased an additional 3 months of rent on October 1,2012 for $3,600.The landlord did not increase rent for Morrill Law Offices.
5.A declaration of dividends for $3,200 occurred on November 1,2012.

---

Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs - direct materials, direct labor, and variable manufacturing overhead - in product costs.

Variable Cost

Variable costs are expenses that vary directly with the level of production or sales volume.

Absorption Costing

An accounting method that includes all of the manufacturing costs in the cost of a product, including direct labor, materials, and overhead.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.