A company had revenues of $187,000 and expenses of $109,000 for the accounting period. The owner withdrew $37,000 during the year. Which of the following entries could not be a closing entry?
A) Debit Income Summary $78,000; credit Owner's, Capital $78,000.
B) Debit Capital $37,000; credit Withdrawals $37,000.
C) Debit Revenues $187,000; credit Income Summary $187,000.
D) Debit Income Summary $109,000, credit Expenses $109,000.
E) Debit Income Summary $187,000; credit Revenues $187,000.

Question

Quizplus · Accepted Answer

Closing entries are made to transfer the balances of revenue, expense, and withdrawal accounts to their respective capital accounts. Option E shows a debit to Income Summary for the total revenue amount and a credit to Revenues, which is not a typical closing entry. This entry would actually reverse the effect of the revenue accounts and decrease the owner's equity. Therefore, option E cannot be a closing entry.

A Company Had Revenues of $187,000 and Expenses of $109,000