If the corporation has a net loss for the period, the closing entry will include a debit to Income Summary and a credit to Retained Earnings.

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If the corporation has a net loss for the period, the closing entry will include a debit to Retained Earnings and a credit to Income Summary. This is because the net loss is subtracted from the beginning balance of Retained Earnings to get the ending balance, and Income Summary is used to summarize the revenues and expenses for the period.

If the Corporation Has a Net Loss for the Period