Question

Closing Entries In the midst of closing procedures, Echo Corporation's accountant became ill and was hospitalized. You have volunteered to complete the closing of the books, and you find that all revenue and expense accounts have zero balances and that the Income Summary account has a single debit entry for $308,800 and a single credit entry for $347,400. The Dividends account has a debit balance of $18,000 and the Retained Earnings account has a credit balance of $117,000.

Answer 1

Answer:

(DR) Income Summary 38,600

(CR)        Retained Earnings      38,600

and

(DR) Retained Earnings 18,000

(CR)          Dividends                  18,000

Explanation:

Since the revenue and expense have zero balances, it means that the Echo corporation's accountant completed the closing entry for those account.

The remaining items to be closed is the Income Summary and Dividends account. Simply put those accounts on the opposite side of their balance.

Income summary has a credit balance of 38,600 (347,400-308,800)

So we have to debit Income Summary and the corresponding credit is Retained Earnings.

Next, dividends has a debit balance of $18,000 so just credit dividends and debit retained earnings to complete the closing procedures.