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    GoldenGateGrl1's Avatar
    GoldenGateGrl1 Posts: 1, Reputation: 1
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    #1

    Feb 17, 2011, 03:23 PM
    Balance in income summary.. Help, please!
    I'm trying to figure out what the balance is in income summary before it is closed to retained earnings using the data given below. I used the equation: retained earnings net income - dividends = retained earnings at end of period.. but I don't think I'm on the right track! Please help.

    CDK Inc.
    Trial Balance
    December 31

    DEBITSCash... $ 15
    Accounts Receivable... $ 25
    Equipment... $190
    Dividends... $ 10
    Salaries Expense... $ 85
    Depreciation... $ 25
    Supplies Expense... $ 15
    TOTAL... $365

    CREDITS
    Accounts Payable... $ 20
    Capital Stock... $105
    Retained Earnings... $ 55
    Service Revenue... $185

    TOTAL... $365
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Feb 18, 2011, 08:02 AM

    When you are closing out your accounts at the end of a period you first close out your revenues and expenses to Income Summary and the balance gets transferred to retained earnings. The balance in Income Summary that gets transferred to the Balance Sheet is known as net Income.

    Dividends will be closed out to retained earnings directly.
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