The Retained earnings account has a credit balance of $37,000 before closing ent

Question

The Retained earnings account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000. What is the correct closing entry for the revenue accounts?

Debit Revenue accounts $55,200; credit Income Summary $55,200. Debit Revenue accounts $37,000; credit Retained earnings $37,000 Debit Revenue accounts $55,200; credit Retained earnings $37,000. Debit Income Summary $55,200; credit Revenue accounts $55,200. Debit Income Summary $37,000; credit Retained earnings $37,000

Explanation / Answer

The correct option would be to transfer the revenue balances to the income summary account.

Hence the correct journal option is:

Revenue a/c..Dr$55200

To income summary a/c..$55200.(A).

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