The adjusted balances for Tomas Co. are listed below.
Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J. Tomas, Capital, $30,000
J. Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close expenses would involve a
A) debit to Income Summary, $20,000
B) credit to Income Summary, $20,000
C) debit to Income Summary, $12,000.
D) debit to Wages Expense, $12,000, and Rent Expense, $8,000.

Question

The adjusted balances for Tomas Co. are listed below.
 Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J. Tomas, Capital, $30,000
J. Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close expenses would involve a
A) debit to Income Summary, $20,000
B) credit to Income Summary, $20,000
C) debit to Income Summary, $12,000.
D) debit to Wages Expense, $12,000, and Rent Expense, $8,000.

Quizplus · Accepted Answer

Expenses are closed by debiting the Income Summary account and crediting each expense account. The total expenses are $20,000 ($12,000 wages + $8,000 rent), so the entry would be a debit to Income Summary for $20,000.

The Adjusted Balances for Tomas Co