[SBMays]

I'm working on my Income Statement and Balance Sheet. Right now I have my balance sheet balanced out right, but my Income Statement is off.

I'm using a periodic system for merchandise.

When I went to do my adjusting entries I used the Merchandising Inventory and Income Summary accounts to record the beginning and ending Merchandise Inventory thus creating the difference in Merchandise, and giving me the current rate of Merchandise.

However, Income Summary is typically used only for closing entries and is a temporary account, therefore not used on Statements.

But here I am, sitting with a balance in my Income Summary, pre-statements.

My question is, should I be doing something with my Income Summary account before I do the statements, or am I supposed to record Income Summary as part of my Income Statement?

[elleplust]

Merchandise Inventory is closed to COGS, income summary is use to close the year end balance for expenses and revenue. Thus it is should also close to retained earnings to zero out the income summary account.

[pready]

The Merchandise Inventory account is not closed at the end of an accountinng period because it is a Balance Sheet account, or oterwise known as a permanent account. Only Income Statement accounts, otherwese known as temporary accounts get closed at the end of an accounting period.

Your revenues and expense accounts get closed to the Income Srummary Account, then the Income Summary account gets closed to the Retained Earnings Account.

Note: Cogs or Cost of Goods Sold Account is an Expense account, which means that it will get closed to the Income Summary account.