Sales revenues were $20 000, Sales returns and allowances were $300, Sales discounts were $700, Cost of sales were $12 000, and all other expenses totaled $4 500. The third closing entry would include which of the following line items?

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The third closing entry involves closing the expense accounts to the Income Summary. Total expenses are the sum of Cost of Sales ($12,000) and other expenses ($4,500), which equals $16,500. The Income Summary should be debited by the net income, which is Sales Revenues ($20,000) minus Sales Returns and Allowances ($300), Sales Discounts ($700), and Total Expenses ($16,500), resulting in a net income of $2,500.

Sales Revenues Were $20 000, Sales Returns and Allowances Were