Question

High Step Shoes had annual revenues of $202,000, expenses of $112,200, and dividends of $24,800 during the current year. The retained earnings account before closing had a balance of $314,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Answer 1

Answer and Explanation:

The journal entry required to close the income summary account is given below:

Income summary Dr ($202,000 - $112,200) $89,800

To retained earnings $89,800

(Being the closing of the income summary is recorded)

The above entry should be passed for closing out the income summary account

The same is to be considered