Which of the following journal entries would be required to close a Salaries Expense account at the end of the accounting period?

• A. Debit Income Summary; Credit Salaries Expense
• B. Debit Retained Earnings; Credit Salaries Expense
• C. Debit Salaries Expense; Credit Cash
• D. Debit Salaries Expense; Credit Income Summary

Answer: (A)

Verified step by step guidance

1. Understand the purpose of closing entries: Closing entries are made at the end of an accounting period to transfer balances from temporary accounts (like revenues, expenses, and dividends) to permanent accounts (like Retained Earnings). This process resets the temporary accounts to zero for the next period.
2. Identify the account to be closed: In this case, the Salaries Expense account is a temporary account that needs to be closed. Expenses are closed by transferring their balances to the Income Summary account.
3. Determine the correct journal entry: To close the Salaries Expense account, you need to debit the Income Summary account (to increase it) and credit the Salaries Expense account (to decrease it to zero). This reflects the transfer of the expense balance to the Income Summary.
4. Understand why other options are incorrect: For example, 'Debit Retained Earnings; Credit Salaries Expense' is incorrect because Retained Earnings is not directly involved in closing expense accounts. Similarly, 'Debit Salaries Expense; Credit Cash' is incorrect because it represents a payment transaction, not a closing entry. 'Debit Salaries Expense; Credit Income Summary' reverses the correct entry and is also incorrect.
5. Write the correct journal entry: The correct journal entry to close the Salaries Expense account is: Debit Income Summary; Credit Salaries Expense. This ensures the Salaries Expense account is reset to zero and its balance is transferred to the Income Summary.