Page 159 - Accounting Principles (A Business Perspective)

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Interest Revenue 418 6 0 0
Income Summary 600 1 3 8 0 0
To close the revenue accounts in the Income Statement credit
column to Income Summary.

After the closing entries have been posted, the Service Revenue and Interest Revenue accounts (in T-account
format) of MicroTrain appear as follows. Note that the accounts now have zero balances.
Service Revenue
(Dr) Account No. 400 (Cr.)
2010 Bal. before 13,200
closing
Dec. 31 To close to
Decreased Income
by $13,200 Summary13,20
0
Bal. after closing —0—
Interest Revenue
Account No. 418 (Cr.)
2010 Bal. before 600
closing
Dec. 31 To close to
Decreased Income
by $600 Summary 600
Bal. after closing —0—
As a result of the previous entry, you would credit the Income Summary account for USD 13,800. We show the

Income Summary account in Step 3.
Expenses appear in the Income Statement debit column of the work sheet. MicroTrain Company has eight
expenses in the Income Statement debit column. As shown by the column subtotal, these expenses add up to USD
6,510. Since expense accounts have debit balances, credit each account to bring it to a zero balance. Then, make the
debit in the closing entry to the Income Summary account for USD 6,510. Thus, to close the expense accounts,
MicroTrain makes the following entry:
MICROTRAIN COMPANY
General Journal Page 4

Date Account Titles and Explanation Post. Debit Credit
Ref.
31 Income Summary 600 6 5 1 0
2010 Dec.
Advertising Expense 505 5 0
Gas and Oil Expense 506 6 8 0
Salaries Expense 507 3 7 8 0
Utilities Expense 511 1 5 0
Insurance Expense 512 2 0 0
Rent Expense 515 4 0 0
Supplies Expense 518 5 0 0
Depreciation Expense—Trucks 521 7 5 0
To close the expense accounts appearing in the Income
The debit of USD 6,510 to the Income Summary account agrees with the Income Statement debit column
subtotal in the work sheet. This comparison with the work sheet serves as a check that all revenue and expense
items have been listed and closed. If the debit in the preceding entry was made for a different amount than the
column subtotal, the company would have an error in the closing entry for expenses.

Accounting Principles: A Business Perspective 160 A Global Text