all revenue and expense accounts have been closed at the end of the calendar year for patton company. the…

all revenue and expense accounts have been closed at the end of the calendar year for patton company. the income summary account has total debits of $530,000 and total credits of $600,000. as of the same date, retained earnings has a balance of $1 and the dividends account has a balance of $48,000. (a) journalize the entries required to complete the closing of the accounts. (credit account titles are automatically indented when the amount is entered. do not indent manually.) account titles and explanation debit credit (to close net income to retained earnings)

all revenue and expense accounts have been closed at the end of the calendar year for patton company. the income summary account has total debits of $530,000 and total credits of $600,000. as of the same date, retained earnings has a balance of $1 and the dividends account has a balance of $48,000. (a) journalize the entries required to complete the closing of the accounts. (credit account titles are automatically indented when the amount is entered. do not indent manually.) account titles and explanation debit credit (to close net income to retained earnings)

Answer

Explanation:

Step1: Calculate net income

Net income = Total credits - Total debits. Given total debits of $530,000 and total credits of $600,000. So, net income = $600,000 - $530,000 = $70,000.

Step2: Journal - entry for closing net income to retained earnings

The income summary account has a credit balance (since credits > debits) which represents net income. We debit the income summary account for the amount of net income and credit the retained earnings account.

Account Titles and Explanation Debit Credit
Income Summary $70,000
Retained Earnings $70,000

Answer:

Account Titles and Explanation Debit Credit
Income Summary $70,000
Retained Earnings $70,000