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    dr_octane13's Avatar
    dr_octane13 Posts: 1, Reputation: 1
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    #1

    Mar 29, 2011, 12:06 PM
    Income Summary
    I am having difficulty calculating closing entries.
    Could you explain in easy to understand terms how to calculate both dr. and cr. For income summary and then totals.
    italiaaaxx's Avatar
    italiaaaxx Posts: 10, Reputation: 1
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    #2

    Apr 14, 2011, 03:16 PM
    Step 1: debit all your revenue accounts and credit income summary.
    Step 2: credit income summary for the cost of all your expenses, and then credit your expense accounts.
    Step 3: credit income summary the difference of the income summary from your revenues - income summary from your expenses.
    Step 4: Debit capital and credit withdrawals (both will be from the balance in your withdrawal account)

    Example:
    1.
    Dr. Service Revenue 84,000
    Dr. Interest Revenue 15,000
    Cr. Income Summary 99,000

    2.
    Dr. Income Summary 66,000
    Cr. Salary Expense 29,000
    Cr. Supplies Expense 6,000
    Cr. Depreciation Expense 12,000
    Cr. Rent Expense 15,000
    Cr. Interest Expense 4,000

    3.
    Dr. Income Summary 33,000 (99,000 - 66,000)
    Cr. Capital 33,000

    4.
    Dr. Capital 20,000
    Cr. Withdrawals 20,000
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