Question

The following information is from the Income Statement of the Sheridan Laundry Service: Revenues Service Revenues $7150 Expenses Salaries and wages expense $ 2700 Advertising expense 550 Rent expense 330 Supplies expense 220 Insurance expense 110 Total expenses 3910 Net income $3240 The entry to close the Laundry Service Revenue account includes a:

Answer 1

Debit of $7150 to Service Revenues and a credit to the Income summary $7150

Step-by-step explanation:

When the income statement is to be closed, the revenue and the expenses are closed to the income summary account which will in turn be closed to the retained earnings account.

As such, to close these accounts, the revenue account which is ordinarily a credit balance is debited and the corresponding credit goes to the income summary.

The expense accounts are credited while the debit follows through to the income summary account