Question

After adjustments at March 31, 20Y2, the end of the first full year of operations, the revenues were $598,000 and expenses were $480,000, for a net income of $118,000. The drawing accounts have debit balances of $40,000 (Lang) and $30,000 (Capri). Journalize the entries to close the revenues and expenses and the drawing accounts at March 31, 20Y2. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

revenues 598,000 debit

income summary 598,000 credit

--- to close revenues accounts---

income summary 480,000 debit

expenses 480,000 credit

-- to close expenses accounts ---

income summary 70,000 debit

lang withdrawals 40,000 credit

capri withdrawals 30,000 credit

--- to close withdrawals account---

Step-by-step explanation:

We will use income summary account to close the accounts:

as the revenues normal balance is credit to close it, we will debit it.

as expenses normal balance is debit to close it, we will credit it.

the withdrawals are done like:

withdrawals debit

cash credit

so their blaance is debit, to close it we will credit them