Reference no: EM132478440

Problem 1: The Retained earnings account has a credit balance of $37,000 before closing entries are made. Total revenues for the period are $55,200, total expenses are $39,800, and dividends are $9,000. What is the correct closing entry for the expense accounts?

Multiple Choice

1. Credit Expense accounts $39,800; debit Retained earnings $39,800.
2. Debit Income Summary $39,800; credit Retained earnings $39,800.
3. Debit Income Summary $39,800; credit Expense accounts $39,800.
4. Debit Expense accounts $39,800; credit Income Summary $39,800.
5. Debit Expense accounts $37,000; credit Retained earnings $37,000.