The Income Summary account has a credit balance of $27,000 after the revenue and expense accounts have been closed.Which of the following is credited to close the Income Summary account?
A)Dividends
B)Sales Revenue
C)Cost of Goods Sold
D)Retained Earnings

Question

Quizplus · Accepted Answer

The Income Summary account is used to summarize the revenues and expenses for the period. At the end of the period, the balance in the Income Summary account is transferred to the Retained Earnings account. Since the Income Summary account has a credit balance of $27,000, we need to debit the Income Summary account for this amount and credit the Retained Earnings account for the same amount. Therefore, the correct choice is D) Retained Earnings.

The Income Summary Account Has a Credit Balance of $27,000