Below is a list of accounts with corresponding ending balances. Account: Account

Question

Below is a list of accounts with corresponding ending balances.

Account: Account Balance

a.      Insurance Expense: $1,300

b.     Cash: 750

c.      Accounts Receivable: 4,000

d.     Cost of Goods Sold: 2,300

Prepare one summary entry to close those accounts that should be closed at the end of the year.

Below is a list of accounts with corresponding ending balances. Account: Account Balance Insurance Expense: $1,300 Cash: 750 Accounts Receivable: 4,000 Cost of Goods Sold: 2,300 Prepare one summary entry to close those accounts that should be closed at the end of the year

Explanation / Answer

Cash and accounts receivable are asset accounts are so they are not closed at the end of the year.

Insurane expense and cost of goods sold are both expense accounts that get closed at the end of the year with a credit

Journal entry:

Debit: Income summary 3,600
Credit: cost of goods sold 2,300
Credit: insurance expense 1,300

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