Lakeside Inc. reports normal account balances in the following accounts on December 31. Prepare closing entries as of December 31. Assume that the company uses the Income Summary account as a temporary clearing account for revenues, expenses, gains, and losses. Dividends are closed directly to retained earnings.
Account Name
Dec 31
Service revenue
$1,000,000
Operating expenses
600,000
Interest revenue
25,000
Interest expense
30,000
Income tax expense
118,500
Dividends
50,000
Retained earnings
188,000
Common stock
100,000
General Journal
Account Name
Dr.
Cr.
Service Revenue
1,000,000
0
Interest Revenue
25,000
0
Income Summary
0
1,025,000
To close revenues to income summary.
Income Summary
748,500
0
Operating Expenses
0
600,000
Interest Expense
0
30,000
Income Tax Expense
0
118,500
Retained Earnings
188,000
0
Income Summary
0
188,000
To close income summary to retained earnings