Question

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

Revenues
Service Revenues $4940
Expenses
Salaries and wages expense $ 1860
Advertising expense 380
Rent expense 230
Supplies expense 150
Insurance expense 80
Total expenses 2700
Net income $2240

The entry to close the Laundry Service Revenue account includes a:

Answer 1

Step-by-step explanation:

The journal entry for closing the laundry service revenue is shown below:

Laundry service revenue A/c Dr $4,940

To Income summary $4,940

(Being service revenue account closed)

We credit the income summary account because the service revenue is added while preparing the income statement. If there is a net income, so the revenue is excess than its expenses and if there is a net loss, so the expenses are excess than its income.