Frog Corporation had revenues of $ 300,000, expenses of $ 200,000, and dividends of $ 45,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a

Question

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To determine the amount of the debit or credit to Retained Earnings, we need to calculate the net income or loss first:
Net Income = Revenues - Expenses
Net Income = $300,000 - $200,000
Net Income = $100,000

Since dividends reduce Retained Earnings, we need to subtract the dividends from the net income:
Retained Earnings = Net Income - Dividends
Retained Earnings = $100,000 - $45,000
Retained Earnings = $55,000

Since Income Summary has a credit balance of $100,000 (revenues of $300,000 minus expenses of $200,000), we need to debit Income Summary by $100,000 and credit Retained Earnings by the same amount to close the temporary account.

Therefore, the answer is C, a credit of $55,000 to Retained Earnings.

Frog Corporation Had Revenues of $ 300,000, Expenses of