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ACCT ch3 homework - Income Summary Account To close or zero...

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Ch 3 homework 3-8 (SE 8 in TextBook) Look at the diagram on page 187: 4 Steps 1. Close Revenue Accounts into Income Summary Revenues have a Credit Normal Balance. To close or zero out a Revenue account you will Debit the account for the amount of balance. Service Revenue has a CR balance of 1,300. To close we would DR 1,300. The offsetting entry would be CR Income Summary; Service Revenue 1,300 Income Summary 1,300 2. Close Expense Accounts to Income Summary. Expense Accounts have a Debit Normal Balance. To close Expense Accounts You will Credit the account. You have 5 separate Expense accounts. Close each one individually with a CR equal to their DR balance. Total of the 5 = 950 Income Summary 950 Expense Accounts 950 3. Close the Income Summary Account into Retained Earnings. CR 1,300 - DR 950 = CR Balance 350 in
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Unformatted text preview: Income Summary Account. To close or zero out you will DR Income Summary for 350, The offsetting account will be CR Retained Earnings for 350. Income Summary 350 Retained Earnings 350 4. Close Dividends into Retained Earnings. Dividends have a DR Normal Balance so to close the Dividends Account you would have a CR entry equal to the balance. Dividends DR balance 175. Closing entry would be CR Dividends 175 and the offsetting entry would be DR Retained Earnings 175 Retained Earnings 175 Income Summary 175 Now all Expense, Revenue and Dividend Accounts along with Income Summary are closed and gone. Retained Earnings has a CR balance of 175...
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