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6 July, 01:06

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

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  1. 6 July, 03:46
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    The closing entry of the income summary account is shown below:

    Income summary A/c Dr $81,300

    To Retained Earning A/c $81,300

    ((Being the difference is credited to retained earning))

    The retained earning balance is calculated by taking a difference between:

    = Annual revenues - Expenditure

    = $185,000 - $103,700

    = $81,300

    The income summary should always be closed after closing of revenue and expenditure account.
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