Question

Use the following account balances from the adjusted trial balance of Maynard Consulting:Account Debit Balance Credit Balance Cash 20,500 Accounts Payable 2,000 B. Conway, Drawing 600 B. Conway, Capital 13,000 Fees Revenue 18,000 Salary Expense 2,600 Rent Expense 3,000 Supplies Expense 1,900 Advertising Expense 800 Select the correct closing entry that ABC Consulting would make to close their expense account(s) at the end of the accounting period.Multiple Choice(A) debit Income Summary $8,300 and credit B. Conway, Capital for $8,300.(B) debit B. Conway, Capital $8,300 and credit Salary Expense $2,600; credit Rent Expense $3,000; credit Supplies Expense $1,900; Advertising Expense $800.(C) debit Salary Expense $2,600; debit Rent Expense $3,000; debit Supplies Expense $1,900; debit Advertising Expense $800 and credit Income Summary $8,300.(D) debit Income Summary $8,300 and credit Salary Expense $2,600; credit Rent Expense $3,000; credit Supplies Expense $1,900; Advertising Expense $800.

Answer 1

Answer:

D) debit Income Summary $8,300 and credit Salary Expense $2,600; credit Rent Expense $3,000; credit Supplies Expense $1,900; Advertising Expense $800.

Explanation:

Account                             Debit Balance     Credit Balance

Cash                                     $20,500

Accounts Payable                                            $2,000  

B. Conway, Drawing                  $600

B. Conway, Capital                                            $13,000

Fees Revenue                                                    $18,000

Salary Expense                         $2,600

Rent Expense                            $3,000

Supplies Expense                      $ 1,900

Advertising Expense                     $800

To close the income statement, the income summary account is introduced. All credit items on the income statement (revenue and incomes) are debited and the income summary is credited while the debit balance accounts (all expenses) are credited and the income summary is debited.

Total expense = $2,600 + $3,000 + $1,900 + $800

= $8,300