Posted by G on .
If you are closing out a company how would you handle retained earnings?
Example: If I opened a company with my own cash for $1,000.00.
I know the entry would be:
$1,000.00 DB to cash
$1,000.00 CR to Retained Earnings
If I used the $1,000.00 cash to pay bills and then had no money left and closed the business.
Would the following be my closing entry for retained earnings:
$1,000.00 DB to close out retained earnings
$1,000.00 CR to the income summary to close business