(LO 3) Tiptoe Shoes had annual revenues of $196,000, expenses of $109,200, and d
ID: 2579656 • Letter: #
Question
(LO 3) Tiptoe Shoes had annual revenues of $196,000, expenses of $109,200, and dividends of $22,400 during the current year. The retained earnings account before closing had a balance of $308,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:
Multiple Choice
Debit Retained earnings $308,000; credit Income Summary $308,000
Debit Retained earnings $64,400; credit Income Summary $64,400
Debit Income Summary $64,400; credit Retained earnings $64,400
Debit Income Summary $86,800, credit Retained earnings $86,800
Debit Retained earnings $86,800, credit Income Summary $86,800
Explanation / Answer
Answer :- Option D). Debit Income Summary $86,800, credit Retained earnings $86,800.
Explanation :- Net income = Revenues - Expenses
= 196000 - 109200
= $ 86800.
Journal entry (for closing income summary account during the end of year)
Income Summary A/c Dr.
To Retained earnings A/c
86800
86800
Date General journal Debit ($) Credit ($) Dec. 31Income Summary A/c Dr.
To Retained earnings A/c
86800
86800
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