Woods, Inc. earned revenues of $11,000 and incurred expenses of $4,000. The company declared and paid cash dividends of $3,000. What is the balance in the Income Summary account after closing net income or loss to the Retained Earnings account?

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The Income Summary account is used to close revenues and expenses. Revenues of $11,000 minus expenses of $4,000 result in a net income of $7,000. This net income is then closed to the Retained Earnings account, leaving the Income Summary account with a balance of $0.