Part 1: Highlight and describe the differences between the Income Summary and In
ID: 2385993 • Letter: P
Question
Part 1:Highlight and describe the differences between the Income Summary and Income Statement.
Guidelines
Highlight what an Income Summary account is and what an Income Statement is.
Highlight the purpose of preparing an Income Summary and an Income Statement.
Highlight the effects of the T account.
The description should not exceed fifty words.
Part 2:
Prepare closing entries in a spreadsheet for the following transactions. Solve this problem using an electronic spreadsheet.
Fees Revenue $1,000
Rent expenses $100
Other expenses $400
Withdrawals $150
Explanation / Answer
Fees Revenue $1,000 Less Rent Expense $100 Gross Profit $900 Less Other Exp. $400 Net Income $500 (Withdrawal/dividends paid aren't shown on income staement) Debit Fees Revenue $1000 Credit Rent Expense $100 Credit Other Expense $400 Credit Income Summary $500 Debit Income SUmmary $500 Credit Retained Earnings $500 Debit Retained Earnings $150 Credit Withdrawals $150