Reference no: EM132489411

Question 1: Tiptoe Shoes had annual revenues of $194,000, expenses of $108,200, and dividends of $21,600 during the current year. The retained earnings account before closing had a balance of $306,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Option 1: Debit Retained earnings $306,000; credit Income Summary $306,000

Option 2: Debit Retained earnings $64,200; credit Income Summary $64,200

Option 3: Debit Income Summary $64,200; credit Retained earnings $64,200

Option 4: Debit Income Summary $85,800, credit Retained earnings $85,800

Option 5: Debit Retained earnings $85,800, credit Income Summary $85,800