A Company's Ledger Accounts and Their End-Of-Period Balances Before Closing

question 216

Multiple Choice

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

• A)$16,780 debit
• B)$7,180 credit
• C)$16,780 credit
• D)$18,280 credit
• E)$23,780 credit

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Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, leading to its net profit or loss.

Interest Dates

The specific dates on which interest payments on a debt or investment are made to bondholders or lenders.

Accrued Interest

Interest that has been earned but not yet received or recorded as of a specific date, often related to bonds or loans.

Investment in Bonds

Purchasing debt securities issued by corporations or governments to earn interest income and potentially benefit from bond price appreciations.