Hot Tamale Company had $120 000 of revenues and $125 000 of expenses. No dividends were paid. The third of the year- end closing entries should include which of the following line items?

Question

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The company had a net loss of $5,000 ($120,000 revenues - $125,000 expenses). The third closing entry involves transferring the net loss to retained earnings, which requires debiting Retained Earnings by $5,000.

Hot Tamale Company Had $120 000 of Revenues and $125