Question

Use the following account balances from the adjusted trial balance columns of RB Auto's worksheet to answer below question.

Account Debit Balance Credit Balance
Cash 20,500
Merchandise Inventory 1,000
Accounts Payable 2,800
R. Holloway, Drawing 500
R. Holloway, Capital 13,000
Sales 15,000
Purchases 2,000
Purchase Returns and Allowances 200
Rent Expense 3,000
Salaries Expense 4,000

Select the correct closing entry that RB Auto would make to close their expense account(s) at the end of the accounting period.

a. debit Income Summary $9,000 and credit R. Holloway, Capital for $9,000.
b. debit Salary Expense $4,000; debit Rent Expense $3,000; debit Purchases $2,000 and credit Income Summary S9,000.
c. debit R. Holloway, Capital $9,000 and credit Salary Expense $4,000; credit Rent Expense $3,000; credit Purchases $2,000.
d. debit Income Summary $9,000 and credit Salary Expenses $4,000; credit Rent Expense $3,000; credit Purchases $2,000.

Answer 1

d. debit Income Summary $9,000 and credit Salary Expenses $4,000; credit Rent Expense $3,000; credit Purchases $2,000.

Step-by-step explanation:

Based on the information given the correct closing entry that RB Auto would make to close their expense account(s) at the end of the accounting period is:

Debit Income Summary $9,000

($4,000+$3,000+$2,000)

Credit Salary Expenses $4,000

Credit Rent Expense $3,000

Credit Purchases $2,000

(To close expense account)