After all revenue and expense accounts have been closed at the end of the fiscal

Question

After all revenue and expense accounts have been closed at the end of the fiscal year. Income Summary has a debit of S747.600 and a credit of $961,700. At the same date, Oebra Allen, Capital has a credit balance of $1,431,000, and Debra Allen, Drawing has a balance of $32,000. Required: (a)Journalize the entries required to complete the closing of the accounts on December 31. (b)Determine the amount of Debra Allen, Capital at the end of the period. (a) Journalize the entries required to complete the closing of the accounts on December 31.

Explanation / Answer

1 ) Entry for Debiting the Income Summarry:

Dr Cr

Income Summary a/c                     7,47,600.00

To Expenses a/c 7,47,600.00     

2) Journal entry for Crediting the Income summary

   Revenue a/c                                   9,61,700.00

    To Expenses a/c 9,61,700.00

3) To close the Income summary account as on December 31st

Income summary a/c                        2,14,100.00

To Retained earnings 2,14,100.00

Ending capital = Beginning capital+ net income - Drawing

=$ 1,431,000 + $ 2,14,100 - $ 32,000

= $ 1,613,100.00

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