Question

The following information is from the Income Statement of the Cheyenne Laundry Service:

Revenues
Service Revenues $5720
Expenses
Salaries and wages expense $ 2160
Advertising expense 440
Rent expense 260
Supplies expense 180
Insurance expense 90
Total expenses 3130
Net income $2590

The entry to close the Income Summary includes a:

Answer 1

Credited to the retained earning accounts by $2,590

Step-by-step explanation:

The net income is come by subtracting the total expenses from the revenue account.

In mathematically,

= Sales revenue - total expenses

The journal entry for closing the Income Summary is shown below:

Income summary A/c Dr $2,590

To Retained earning A/c $2,590

(Being income summary account is closed)

The net income amount would be added to the retained earning account by $2,590