Closing entries are better explained via an example.ExampleThe following example shows the closing entries based on the adjusted trial balance of Company A.NoteDateAccountDebitCredit 1 Jan 31 Service Revenue 85,600 Income Summary 85,600 2 Jan 31 Income Summary 77,364 Wages Expense 38,200 ...
Closing entries are journal entries created at the end of an accounting period to transfer your temporary account balances into one permanent account. The process is done so that you can determine how much retained earnings or owner’s equity you own, after expenses and/or dividends have been s...