![]() ![]() The balance in income summary now represents $37,100 credit – $28,010 debit or $9,090 credit balance…does that number seem familiar? It should - income summary should match net income from the income statement. The total debit to income summary should match total expenses from the income statement.Īt this point, you have closed the revenue and expense accounts into income summary. ![]() Just like in step 1, we will use Income Summary as the offset account but this time we will debit income summary. The expense accounts have debit balances so to get rid of their balances we will do the opposite or credit the accounts. The credit to income summary should equal the total revenue from the income statement. We will debit the revenue accounts and credit the Income Summary account. To make them zero we want to decrease the balance or do the opposite. We see from the adjusted trial balance that our revenue accounts have a credit balance. We need to do the closing entries to make them match and zero out the temporary accounts.Ĭlose means to make the balance zero. Notice how the retained earnings balance is $6,100? On the statement of retained earnings, we reported the ending balance of retained earnings to be $15,190. ![]() We will look at the following information for MicroTrain from the adjusted trial balance: ![]() We use a new temporary closing account called income summary to store the closing items until we get close income summary into Retained Earnings. If we want to make the account balance zero, we will decrease the account. Let’s review what we know about these accounts:
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |