What effect will the following closing entry have on the retained earnings account?

A)Retained earnings will remain unchanged.
B)Retained earnings will decrease by $2,550.
C)Retained earnings will increase by $2,550.
D)Retained earnings will be transferred to the income statement.

Question

What effect will the following closing entry have on the retained earnings account?

A)Retained earnings will remain unchanged. 
B)Retained earnings will decrease by $2,550. 
C)Retained earnings will increase by $2,550. 
D)Retained earnings will be transferred to the income statement.

Quizplus · Accepted Answer

A credit to retained earnings of $2,550 (to close the service revenue,interest expense,and operating expenses accounts)will increase retained earnings by $2,550.

What Effect Will the Following Closing Entry Have on the Retained