This transfers the income or loss from an income statement account to a balance sheet account. b. a credit to Rent Expense for $1,000, c. a credit to Income Summary for $3,600. The entry to close the Income Summary account may include: A) a debit to Income Summary and a credit to the owner's capital account. expense accounts) are closed by making a credit entry for the balance in the general ledger. Let us discuss how to do the latter. debit to Income Summary for $2,950. B) Journal entry to close all expense accounts for the period. true : The Income Summary account is located in the owner's equity section of the general ledger. The following information is from the Income Statement of the Dirt Poor Laundry Service: Revenues Laundry Service Revenues $5,500. True False . 26) M. Smuts showed a net income of $6,000. Closing journal entries are made at the end of an accounting period to prepare temporary accounts for the next period.. This is done through a journal entry debiting all revenue accounts and crediting income summary. Solution for Oros showed a net income of $6,500. In the closing stage, balances in all income accounts are transferred to the income summary account … D. none of the above. Close the revenue accounts with credit balances. Credit to Revenues for $28,300. If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a _____. The balance for the revenue is recorded in the income summary for the company, since revenue is one of the parts of income calculation. We will prepare the closing entries for Hanlon. For example, if the Income Summary account has a $10,000 debit balance, you must credit this account for that amount. B. debit to … For the rest of the year, the income summary account maintains a zero balance. I don't understand how closing contra asset accounts works. Expenses Wages expense $1,450 Advertising expense … accounting-and-taxation ; 0 Answers. sales accounts) are closed by making a debit entry for the balance, and the debit accounts (i.e. You must do the opposite of where the balance is. The income summary is a temporary account used to make closing entries. a. How to Close an Account into Income Summary Account. D) Both B and C are correct. The Income Summary is very temporary since it has a zero balance throughout the year until the year-end closing entries are made. false: If a business reports a net loss for the period, the journal entry to close the Income Summary account would be a debit to capital and a credit to Income Summary. Closing entries transfer the net income or net loss to the withdrawals account. To do this, we will do the opposite of the balance in the adjusted trial balance in a journal entry and use Income Summary to balance the entry. The batch job processes all general accounts of the income statement type and creates entries that cancel out their respective balances. Let’s explore each entry in more detail using Printing Plus’s information from Analyzing and Recording Transactions and The Adjustment Process as our example. That is, each entry is the sum of all the general ledger entries on the account in the fiscal year. This is the only time that the income summary account is used. Income summary account is a temporary account used in the closing stage of the accounting cycle to compile all income and expense balances and determine net income or net loss for the period. To do this, their balances are emptied into the income summary account. We want to remove this credit balance by debiting income … true: The last step in the accounting cycle is the preparation of the post-closing trial balance. The entry to close the Income Summary account would include a: A. credit to Cash, $6,500. Best answer. Step 3: Close Income Summary account. b. credit to Rent Expense for $1,000. false: The Income Summary account is a simple income statement in the ledger. $0. The third entry closes the Income Summary account to Retained Earnings. D) Both B and C are correct. In addition, the income summary closing entry tells us the company’s profit for the year. At the end of the reporting period, the credit accounts (i.e. The content of the income … Net income $1,800 The entry to close the expense accounts includes a a. debit to Income Summary for $1,800. True False 15. The opposite entry then goes into the owner’s equity account. C) debiting the expense accounts and crediting the owner's capital account. Credit to income summary … B. debit to … b. a debit balance of $3,400. C) Close Income Summary In partnerships, a compound entry transfers each partner's share of net income or loss to their own capital account. Close Income Summary to Retained Earnings. The entry to close the Income Summary account would include a: asked May 11, 2016 in Business by GipsyKing. D) a debit to Income Summary and a credit to the owner's drawing account. Journalize the closing entries: A) Journal entry to Close revenues. It should — income summary should match net income from the income statement. B) credit to M. Smuts Capital, $6,000. The closing journal entries associated with these steps are demonstrated below. During this closing process, a new temporary account, called income summary, is created to transfer the income and expense account balances. Solution for J. Oros showed a net income of $6,500. Here are some example closing entries. At this point, you have closed the revenue and expense accounts into income summary. B) debiting Income Summary and crediting the expense accounts. Income Summary. A) debit to M. Smuts Capital, $5,000. The entry to close the Income Summary account would include a: A. credit to Cash, $6,500. Next, the balance resulting from the closing entries will be moved to Retained Earnings (if a corporation) or the owner's capital account (if a sole proprietorship). 1. Close the expense accounts to Income Summary. Close Dividends to Retained Earnings. The entry to close the Income Summary account would include a: A) debit to M. Smuts Capital, $6,000. C) a debit to Cash and a credit to Income Summary. answered May 11, 2016 by Ronaldo . When the balance of the Income Summary account is a credit, the entry to close this account is: asked May 11, 2016 in Business by illedehomme A) debit Withdrawals; credit Income Summary. d. debit to Wages Expense for $3,000. true: To close a revenue account, debit it for the amount of its credit balance. M. Smuts showed a net income of $5,000. Revised Summer 2016 Chapter Review Page 12 of 20 Multiple Choice Questions 1. The information needed to prepare closing entries comes from the adjusted trial balance. a. a debit to Income Summary for $3,400. Closing entry 3: The income summary account's $61 credit balance equals the company's net income for the month of April. B) a debit to Income Summary and a credit to Cash. A. the Income Summary account and a credit to the Accumulated Depreciation account. 18. Next, the same process is performed for expenses. c. credit to Income Summary for $5,200. All revenue accounts are closed together in a single entry, while all expense accounts are closed in the second entry. Close the revenue accounts to Income Summary. Credit to income summary $35,300. All expense and revenue accounts now show a zero balance, and the income summary has a credit balance of $44,000. credit to Common Stock for $2,950. d. a debit to Wages Expense for $2,000. Processing of closing entries occurs after the end of the company's accounting period. The entry to close the Income Summary includes a: credit to Income Summary for $2,950. Since a company prepares financial statements at the end of each month, closing entries are prepared at the end of each month. B. the Depreciation Expense account and a credit to the Accumulated Depreciation account. Income Summary is a temporary account in which all the closing entries of revenue and expenses accounts are netted at the end of the accounting period, and the resulting balance is considered as profit or loss. The entry to close the expenses accounts includes a * Debit to income summary $12,900. The entry to close the revenue accounts includes a * Debit to income summary $32,300. C) debit to Income Summary, $5,000. To close income summary, debit the account for $61 and credit the owner's capital account for the same amount. All temporary accounts must be reset to zero at the end of the accounting period. The entry to close Prepaid insurance includes a credit to that account. The net balance of the income summary account is closed to the retained earnings account.. We can now move that balance over to Retained Earnings. Remember to close means to make the balance zero. debit to Retained Earnings for $2,950. c. a credit balance of $3,400. The fourth entry closes the Dividends account to Retained Earnings. Debit to Revenues for $37,100. Closing entries are used in accounting to transfer the results of business operations, originally accounted for in temporary revenue and expense accounts, into permanent equity accounts. When expense accounts are closed, the Income Summary account is credited. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts during the year-end closing process would be: A) Dec. 31 Fees Earned 750 Rent Revenue 175 Income Summary 925 B) Dec. 31 Income Summary 925 Fees Earned 750 Rent Revenue 175 C) Dec. 31 Revenues 925 Income Summary 925 D) Dec. 31 Income Summary 925 Revenues 925 Closing an expense account means transferring its debit balance to the Income Summary account.The Journal entry to close an expense account, therefore, consists of a credit to the expense account in an amount equal to its debit balance, with an offsetting debit to the Income Summary: Closing Income Summary Account. Step 1 – Record the Revenue to Income Summary Closing Entry The revenue account shows the company’s total review for the accounting period. false: Closing the revenue account is the second closing entry. 77.The income statement for the month of June, 2012 of Camera Obscura Enterprises contains the following information: Close the Income Summary account by either debiting it or crediting it, depending on the balance it contains. The journal entry to close expense accounts includes A) debiting the expense accounts and crediting Income Summary. C) debit to Income Summary, $6,000. The balance in income summary now represents $37,100 credit – $28,010 debit or $9,090 credit balance…does that number seem familiar? B) credit to M. Smuts Capital, $5,000. All expenses are closed … C. the Accumulated Depreciation account and a credit to the Income Summary account. The entry to close the expense accounts includes . 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