Question

On December 31, Gray Company had the following adjusted trial balance:

Additional Resources

Account Titles	Debit		Credit
Cash	14,560
Accounts Receivable	8,470
Prepaid Rent	7,140
Equipment	46,200
Accumulated Depreciation			7,800
Accounts Payable			33,320
Capital Stock			22,000
Retained Earnings			24,600
Dividends	16,000
Sales			71,800
Sales Discounts	1,150
Sales Returns and Allowances	1,420
Cost of Goods Sold	43,080
Selling Expenses	10,100
General and Administrative Expenses		11,400
		159,520		159,520

Required
Prepare the third closing entry to close the Income Summary account to the Retained Earnings account.

Date

Account Title

Debit

Credit

(Choose one)Accumulated DepreciationAccounts PayableAccounts ReceivableCapital StockCashCost of Goods SoldDividendsEquipmentGeneral and Administrative ExpensesIncome SummaryPrepaid RentRetained EarningsSalesSales DiscountsSelling ExpensesSales Returns and Allowances

(Choose one)Accumulated DepreciationAccounts PayableAccounts ReceivableCapital StockCashCost of Goods SoldDividendsEquipmentGeneral and Administrative ExpensesIncome SummaryPrepaid RentRetained EarningsSalesSales DiscountsSelling ExpensesSales Returns and Allowances

(Choose one)Accumulated DepreciationAccounts PayableAccounts ReceivableCapital StockCashCost of Goods SoldDividendsEquipmentGeneral and Administrative ExpensesIncome SummaryPrepaid RentRetained EarningsSalesSales DiscountsSelling ExpensesSales Returns and Allowances

(Choose one)Accumulated DepreciationAccounts PayableAccounts ReceivableCapital StockCashCost of Goods SoldDividendsEquipmentGeneral and Administrative ExpensesIncome SummaryPrepaid RentRetained EarningsSalesSales DiscountsSelling ExpensesSales Returns and Allowances

(Choose one)Accumulated DepreciationAccounts PayableAccounts ReceivableCapital StockCashCost of Goods SoldDividendsEquipmentGeneral and Administrative ExpensesIncome SummaryPrepaid RentRetained EarningsSalesSales DiscountsSelling ExpensesSales Returns and Allowances

Answer 1

Answer:

Third entry

Date	Account title and explanation	Debit	Credit
Dec 31	Income summary	$ 4,650
	Retained earnings		$ 4,650
	[To close income summary account]

Explanation:

Date	Account title and explanation	Debit	Credit
Dec 31	Sales revenues	$ 71,800
	Income summary		$ 71,800
	[To close revenue accounts]
Dec 31	Income summary account	$ 67,150
	Cost of goods sold		$ 43,080
	Sales discount		$ 1,150
	Sales returns and allowance		$ 1,420
	Selling Expense		$ 10,100
	General and Administrative expenses		$ 11,400
	[To close expenses accounts]
Dec 31	Income summary [$71,800 - 67,150]	$ 4,650
	Retained earnings		$ 4,650
	[To close income summary account]
Dec 31	Retained earnings	$ 16,000
	Dividends		$ 16,000
	[To close dividends]