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 includes a credit to Income Summary for the total amount of revenue earned for the month (₤8,000) and debits to all the expenses incurred (₤4,100). The remaining credit balance in Income Summary (₤3,900) is then transferred to Retained Earnings, which represents the company's cumulative profits and losses. Therefore, the correct answer is (D) a credit to Retained Earnings for ₤3,900.

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