Question

After adjustments at March 31, 20Y2, the end of the first full year of operations, the revenues were $598,000 and expenses were $480,000, for a net income of $118,000. The drawing accounts have debit balances of $40,000 (Lang) and $30,000 (Capri). Journalize the entries to close the revenues and expenses and the drawing accounts at March 31, 20Y2. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

Answer:

revenues 598,000 debit

      income summary        598,000 credit

--- to close revenues accounts---

income summary 480,000 debit

    expenses            480,000 credit

-- to close expenses accounts ---

income summary 70,000 debit

       lang   withdrawals 40,000 credit

       capri  withdrawals 30,000 credit

--- to close withdrawals account---

Explanation:

We will use income summary account to close the accounts:

as the revenues normal balance is credit to close it, we will debit it.

as expenses normal balance is debit to close it, we will credit it.

the withdrawals are done like:

withdrawals debit

         cash           credit

so their blaance is debit, to close it we will credit them