Question

a company's adjusted trial balance shows two expense accounts: wages expense with a debit balance of $2,000 and rent expense with a debit balance of $1,000. the journal entry to close these accounts will include which of the following:

Answer 1

Answer and Explanation:

To close the Wages Expense and Rent Expense accounts, we need to transfer their debit balances to the Income Summary account. The Income Summary account is a temporary account that is used in the closing process to summarize the company's revenues and expenses for the period.

The journal entry to close these accounts will include a debit to the Income Summary account for the total of the expenses and a credit to each of the expense accounts for the same amount. The entry will look like this:

Debit: Income Summary $3,000

Credit: Wages Expense $2,000

Credit: Rent Expense $1,000

This journal entry transfers the balances of the Wages Expense and Rent Expense accounts to the Income Summary account, which will then be used to determine the net income or loss for the period.