Question

Desert, Inc. has year-end account balances as of December 31, 2020 of Sales Revenue $907,000; Interest Revenue $24,000; Cost of Goods Sold $593,000; Administrative Expenses $188,000; Income Tax Expense $31,000; Dividends $18,000, Unrealized Pension Liability Adjustments of $21,500 (dr) and a correction of an error in recording Depreciation Expense for 2018 of $12,000 (dr).
To prepare the year-end closing entry required to close the Income Summary account, Desert would record a:_________

a. Debit to Net Income for $107.000.
b. Debit to Income Summary for $119,000
c. Debit to Retained Earnings for $89,000
d. Debit to Income Summary for $67,500

Answer 1

Answer:

Dr to income summary for $119,000

Explanation:

The year end closing entry to required to close the income entry would be ;

Sales revenue. Dr $907,000

Interest revenue Dr $24,000

Income summary Cr $931,000

Income summary Dr $812,000

Cost of goods sold Cr $593,000

Administrative expenses Cr $188,000

Income tax expense Cr $31,000

*Income summary Dr. $119,000

Retained earnings Cr $119,000

Retained earnings. Dr $18,000

Dividend Cr $18,000