Use the following account balances from the adjusted trial balance columns of RB Auto's worksheet to answer below question. Select the correct closing entry that RB Auto would make to close their expense account(s)at the end of the accounting period.
A) debit Salary Expense $4,000;debit Rent Expense $3,000;debit Purchases $2,000 and credit Income Summary $9,000
B) debit Income Summary $9,000 and credit Salary Expense $4,000;credit Rent Expense $3,000;credit Purchases $2,000
C) debit Income Summary $9,000 and credit R.Holloway,Capital for $9,000
D) debit R.Holloway,Capital $9,000 and credit Salary Expense $4,000;credit Rent Expense $3,000;credit Purchases $2,000

Question

Use the following account balances from the adjusted trial balance columns of RB Auto's worksheet to answer below question.  Select the correct closing entry that RB Auto would make to close their expense account(s)at the end of the accounting period.
A) debit Salary Expense $4,000;debit Rent Expense $3,000;debit Purchases $2,000 and credit Income Summary $9,000 
B) debit Income Summary $9,000 and credit Salary Expense $4,000;credit Rent Expense $3,000;credit Purchases $2,000 
C) debit Income Summary $9,000 and credit R.Holloway,Capital for $9,000 
D) debit R.Holloway,Capital $9,000 and credit Salary Expense $4,000;credit Rent Expense $3,000;credit Purchases $2,000

Quizplus · Accepted Answer

The expense accounts are being closed to Income Summary, which will then be closed to Retained Earnings or the owner's capital account. B is the correct entry because it debits Income Summary and credits the individual expense accounts for their balances. This will reduce the balance in Income Summary to just the net income for the period.

Use the Following Account Balances from the Adjusted Trial Balance