Exhibit 4-2 Short Company has the following income statement for 2012:

-Refer to Exhibit 4-2. Given the information above, the entry to close expenses would include a

Question

Exhibit 4-2 Short Company has the following income statement for 2012:
 
-Refer to Exhibit 4-2. Given the information above, the entry to close expenses would include a

Quizplus · Accepted Answer

The entry to close expenses would involve transferring the balances in the expense accounts to the Income Summary account. In this case, the total expense amount is $525,000, which would be credited to Income Summary. Therefore, the opposite entry would be a debit to Income Summary for $525,000. Within the expense accounts, Utilities expense has a balance of $42,000, which would be credited to close it out. Hence, option B is the correct choice.

Exhibit 4-2 Short Company Has the Following Income Statement for 2012