Question

What is the journal entry to close fees earned, $750, and rent revenue, $175, during the year-end closing process?

Answer 1

To close fees earned and rent revenue during the year-end closing process, debit both revenue accounts and credit the income summary account for the total revenue amount.

Step-by-step explanation:

To close fees earned of $750 and rent revenue of $175 during the year-end closing process, the following journal entry should be made:

1. Debit the fees earned account for $750.
2. Debit the rent revenue account for $175.
3. Credit the income summary account for the total amount ($750 + $175 = $925) to close the revenue accounts.

The purpose of this journal entry is to transfer the balances from the revenue accounts to the income summary account, which is part of the process of preparing the company's financial statements for the year-end. The revenue accounts need to be cleared out to start the new fiscal year with a zero balance.