Tara Westmont, the Stockholder of Tiptoe Shoes, Inc

Multiple Choice

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700. The company paid $18,000 cash in dividends to the owner (sole stockholder) . The retained earnings account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

A) Debit Retained Earnings $297,000; credit Income Summary $297,000
B) Debit Retained Earnings $63,300; credit Income Summary $63,300
C) Debit Income Summary $63,300; credit Retained Earnings $63,300
D) Debit Income Summary $81,300; credit Retained Earnings $81,300
E) Debit Retained Earnings $81,300; credit Income Summary $81,300