The entry to close Income Summary to Retained Earnings includes

Question

Quizplus · Accepted Answer

To close Income Summary to Retained Earnings, we need to transfer the net income (or loss) from Income Summary to Retained Earnings. Since Income Summary has a credit balance, indicating a net income, we need to credit Retained Earnings. Therefore, the correct entry is a credit to Retained Earnings for the amount of net income, which is ₤3,400 in this case. The other options either do not make sense or are not relevant to this particular closing entry.

The Entry to Close Income Summary to Retained Earnings Includes