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19 October, 06:28

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. Dividends of $8,000 were paid in cash during the same period. Which of the following entries could not be a closing entry? a. a debit to the Income Summary and a credit to the Owner's Capital for $13,000

b. a debit to the Income Summary and a credit to the Revenues account for $75,000

c. a debit to the Revenues and a credit to the Income Summary account for $75,000

d. a debit to the Income Summary and a credit to the Expenses for $62,000

e. all of these are possible closing entries

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Answers (1)
  1. 19 October, 06:56
    0
    b. a debit to the Income Summary and a credit to the Revenues account for $75,000

    Explanation:

    As we know that

    The closing entries are shown below:

    1. Sales Revenue A/c Dr $75,000

    To Income Summary A/c $75,000

    (Being revenue account closed)

    2. Income summary A/c Dr $62,000

    To Expenses A/c $62,000

    (Being the expenses accounts are closed)

    3. Income summary A/c Dr $13,000 ($75,000 - $62,000)

    To Owner's capital $13,000

    (Being the difference is credited to owners capital)
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