Question

The Retained earnings account has a credit balance of $39,000 before closing entries are made. Total revenues for the period are $57,200, total expenses are $40,800, and dividends are $9800. What is the correct closing entry for the expense accounts?

Answer 1

Debit income summary $40,800

Credit expense accounts $40,800

Step-by-step explanation:

The correct closing entry for expense account would be to debit the income summary for $40,800 and then credit the expense accounts for $40,800.

Here, other items such as revenue, retained earnings and dividends would all be ignored because we were specifically asked to get the correct closing entry for expense account, hence; only expense value would be considered.