Question

For Review: In chapter 4 you read about completing the accounting cycle. At the end of the period all temporary accounts are closed. There are 4 basic closing journal entries. Prepare the four basic entries (debits and credits) that would be made if a business were preparing closing entries assuming net income was made during the period. You need not use any numbers ($). Just the accounts that you would debit and credit.

Answer 1

	Closing Entries
	Particulars			Debit	Credit
1)	Revenues			xxx
	To Income Summary				xxx
	(To close all the revenue accounts)
2)	Income Summary			xxx
	To Expenses				xxx
	(To close all the expense accounts)
3)	Income Summary			xxx
	To Retained Earnings				xxx
	(To transfer the net income to
	retained earnings and to close
	income summary)
4)	Retained Earnings			xxx
	To Dividend				xxx
	(To close dividend account)