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28 August, 08:33

A company had service revenue of $257,000, rent expense of $10,700, utility expense of $4,200, salary expense of $19,200, depreciation expense of $9,700, advertising expense of $4,570, dividends in the amount of $18,700, and a beginning balance in retained earnings of $18,600. What is the balance in the income summary account before it is closed for the period

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  1. 28 August, 08:38
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    Income summary has a $208,630 credit balance before being closed

    Explanation:

    The closing entries should be:

    Dr Service revenue 257,000

    Cr Income summary 257,000

    Dr Income summary 48,370

    Cr Rent expense 10,700

    Cr Utility expense 4,200

    Cr Salary expense 19,200

    Cr Depreciation expense 9,700

    Cr Advertising expense 4,570

    Income summary

    Debit Credit

    18,370 257,000

    208,630

    In order to close income summary:

    Dr Income summary 208,630

    Cr Retained earnings 208,630

    If you want to close dividends:

    Dr Retained earnings 18,700

    Cr Dividends 18,700
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