Closing revenues and expenses directly to Retained Earnings

Transaction

At year end, after all adjusting entries including income taxes, a service corporation’s only revenue and expense accounts are: Service Revenue $215,000.00 (credit balance), Salaries Expense $98,000.00, Rent Expense $18,000.00 and Income Tax Expense $12,250.00 (debit balances). Close them and transfer the net income to Retained Earnings in one compound entry.

Assumptions: The corporation closes its revenue and expense accounts directly to Retained Earnings.