Answer:
Usually, we use the "Income Summary" account to close the Income Statement accounts such as revenues and expenses.
First, close the revenue account by debiting it:
(DR) Service Revenue $450,000
(CR) Income Summary $450,000
Then, close the expenses accounts by crediting them:
(DR) Income Summary $407,000
(CR) Salaries Expense $350,000
(CR) Rent Expense $17,500
(CR) Depreciation Expense $35,000
(CR) Interest Expense $4,500
Finally, close the Income Summary account to Retained Earnings.
The balance of the Income Summary is a credit balance of $43,000
(credit of $450,000 less debit of $407,000)
So, to close the account we have to debit it.
(DR) Income Summary $43,000
(CR) Retained Earnings $43,000
