everything else is correct except red box. ps ANSWER ISNT retained earnings....

Question

everything else is correct except red box.

ps ANSWER ISNT retained earnings.... i tried n it was wrong

Exercise 195 Your answer is partially correct. Try again. Prepare the necessary closing entries based on the following selected accounts. (Credit Accumulated Depreciation Depreciation Expense Owner's Capital Owner's Drawings Salaries and Wages Expense Service Revenue $10,000 6,000 20,000 9,000 19,000 40,000 Account Titles and Explanation Debit Credit 340,000 ervice Revenu ncome Summar To close revenue account) 40.000 25,000 ncome Summar Salaries and Wages Expense epreciation Expen (To close expense accont) 6,00 ncome Summary 15,00 15,00 tTo close net income/loss) wner's Capita

Explanation / Answer

Main Step: First identify whether it is a Proprietary or Partnership or a Company.

If it is a company we have to close Income Summary balance by transferring to Retained Earnings.

If it is a partnership firm or Sole Proprietorship, we have to transfer balance of Income Summary to Owner's Capital Account.

In this question we have Capital Account so definitely it should not be a company or corporation because a typical company have common stock account and Retained Earnings account.

So we have to transfer balance in Income Summary to Owner's Capital.

So journal entry shall be

Debit Income Summary... $15,000

Credit Owner's Capital.......... $15,000

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