Question

A company had service revenue of $257,000, rent expense of $10,700, utility expense of $4,200, salary expense of $19,200, depreciation expense of $9,700, advertising expense of $4,570, dividends in the amount of $18,700, and a beginning balance in retained earnings of $18,600. What is the balance in the income summary account before it is closed for the period

Answer 1

Income summary has a $208,630 credit balance before being closed

Step-by-step explanation:

The closing entries should be:

Dr Service revenue 257,000

Cr Income summary 257,000

Dr Income summary 48,370

Cr Rent expense 10,700

Cr Utility expense 4,200

Cr Salary expense 19,200

Cr Depreciation expense 9,700

Cr Advertising expense 4,570

Income summary

Debit Credit

18,370 257,000

208,630

In order to close income summary:

Dr Income summary 208,630

Cr Retained earnings 208,630

If you want to close dividends:

Dr Retained earnings 18,700

Cr Dividends 18,700