Question

Journalize the entries that were required to close the accounts at October 31. If an amount box does not require an entry, leave it blank.

Answer 1

To journalize the closing entries on October 31, you must transfer revenue and expense account balances to the Income Summary account, and then move the Income Summary's balance to retained earnings, also including dividends or withdrawals if applicable.

Step-by-step explanation:

The question asks how to journalize closing entries as of October 31. Closing entries are part of the accounting cycle, and they transfer the balances of temporary accounts to permanent accounts. Closing entries involve transferring the balances of revenue and expense accounts to the Income Summary account and then transferring the balance of the Income Summary account to the retained earnings or capital accounts. Lastly, any dividends or withdrawals are closed to the retained earnings or capital accounts.

When journalizing closing entries, you would:

• Debit each revenue account for its balance and credit Income Summary.
• Debit Income Summary for the total expenses and credit each expense account for its balance.
• Debit Income Summary for the net income (or credit for a net loss) and credit Retained Earnings (or debit if there's a net loss).
• If there are dividends or withdrawals, debit Retained Earnings and credit the Dividends or Withdrawals account.