All revenue accounts are first switched over to the income summary. A journal entry debiting all revenue accounts and crediting the income summary is used to accomplish this.
The same procedure is then used to calculate expenditures. Crediting the expense accounts and debiting the income summaries closes out all expenditures.
Clear the balances in the revenue accounts by debiting each revenue account and crediting the income summary account. The balances in all expense accounts are eliminated by crediting all expense accounts and debiting the income summary account. Close the retained profits account's income summary account.
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