Answer:
Correct answer is A $5,400
Explanation:
At the end of the calendar/fiscal year, all nominal accounts should be closed to retained earnings. And we need to make 2 entries.
Closing entries:
First, close all nominal accounts to income and expense summary account
Debit Service revenue $20,000
Credit Salaries expense $8,000
Credit Insurance expense $2,000
Credit Utilities expense $3,000
Credit Interest expense $200
Credit Depreciation expense $1,400
Credit income & expense summary $5,400
Second, close income and expense summary account to Retained earnings
To close income & expense summary:
Debit income and expense summary $5,400
Credit Retained earnings $5,400
