Final answer:
To close the expense accounts, debit the Income Summary account for the total expense amount and credit each expense account for its individual balance, resetting them to zero at the end of the accounting period.
Step-by-step explanation:
The process of closing the expense accounts involves transferring their balances to the Income Summary account, effectively resetting the expense accounts to zero for the start of the new accounting period. To record the entry to close the expense accounts, you would debit the Income Summary account and credit each expense account for its balance. Here’s what a general journal entry might look like:
For example, if you have two expense accounts with balances The resting balances as follows - Rent Expense $1,000 and Utilities Expense $500 - the entry would be to debit Income Summary for $1,500 and credit Rent Expense and Utilities Expense with $1,000 and $500 respectively.
It's important to understand that the Income Summary account is a temporary account used during the closing process. At the end of the process, after revenues have also been closed to Income Summary, the balance in Income Summary is then closed to the Retained Earnings account.