Question

After completing the closing entries for Revenues and Expenses, the Income Summary account has a credit balance of $1,500. The journal entry to close out the $1,500 credit balance of Income Summary would be:

Answer 1

Step-by-step explanation:

The journal entry to close the credit balance of the income summary account is as follows:

Income summary Dr $1,500

To Retained earning $1,500

(Being the difference is credited to retained earning)

Since the income summary has a credit balance which reflects the net income so we debited the income summary account and credited the retained earning account so that the proper posting could be done