The income statement for the month of June, 2014 of Taylor Enterprises contains the following information: The entry to close Income Summary to Retained Earnings includes
A) a debit to Revenue for ₤8,000.
B) credits to Expenses totalling ₤4,100.
C) a credit to Income Summary for ₤3,900
D) a credit to Retained Earnings for ₤3,900.

Question

The income statement for the month of June, 2014 of Taylor Enterprises contains the following information:  The entry to close Income Summary to Retained Earnings includes
A) a debit to Revenue for ₤8,000. 
B) credits to Expenses totalling ₤4,100. 
C) a credit to Income Summary for ₤3,900 
D) a credit to Retained Earnings for ₤3,900.

Quizplus · Accepted Answer

The entry to close Income Summary to Retained Earnings involves transferring the net income or loss for the period to Retained Earnings. As per the information provided, the net income for the month of June is ₤3,900 (revenue of ₤8,000 minus expenses of ₤4,100). Therefore, the entry to close Income Summary to Retained Earnings will include a credit to Income Summary for ₤3,900 and a corresponding debit to Retained Earnings for the same amount. Hence, the correct answer is D.

The Income Statement for the Month of June, 2014 of Taylor