Explanation Closing entries: The journal entries prepared to close the temporary accounts to Retained Earnings account are referred to as closing entries. The revenue, expense, and dividends accounts are referred to as temporary accounts because the information and figures in these accounts is held temporarily and consequently transferred to permanent account at the end of accounting year. Prepare closing entries for Company YCS. Date Account titles and Explanation Debit Credit December 31 Sales $261,000 Income summary $261,000 (To close revenue accounts) December 31 Income summary $221,700 Sales returns and allowances $21,000 Purchases $160,000 Wages expense

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Prepare closing entries for Company YCS.

Solution Summary: The author explains how to prepare closing entries for Company YCS. Revenue, expense, and dividends accounts are referred to as temporary accounts because the information and figures in these accounts is held temporarily and consequently transferred to permanent account at

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