record the entry to close the expense accounts
Expenses accounts normally have debit balances. Hence, when expenses are closed, Income summary is debited and expenses are credited.
Journal
Income summary | .... | |
Expenses | ....... |
For example, if there are expenses like cost of goods sold 1,000, salary expense $500, advertising expense $200 and insurance expense $100, following entry would be made to close the given expenses:
Journal
Income summary | 1,800 | ||
cost of goods sold | 1,000 | ||
salary expense | 500 | ||
advertising expense | 200 | ||
insurance expense | 100 |
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