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1 January, 09:48

After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $2,450,000 and a credit of $3,000,000. Journalize the entries required to complete the closing of the accounts on December 31. Refer to the Chart of Accounts for exact wording of account titles. How does grading work?

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  1. 1 January, 10:00
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    income summary 550 debit

    retained earnings 550 credit

    --to close income sumary against RE--

    Explanation:

    To complete the closing entries we should determinate the balance of the Income Summary account and then, transfer into Retained Earnings.

    Income Summary

    Debit Credit

    2,450

    3,000

    Balance 550

    We will debit income summary so his blanace ends in zero and credit retained earnings so net income is accumualted and added into equity to represent it in the balance sheet.
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