The Income Summary Account provides a place to summarize all revenues and expenses and move them to Retained Earnings. Patient Services 3,400 Lab Fees 1,800 Income Summary 5,200 To close Revenue accounts 2. To close Expense accounts 3. Income Summary 2,200 Retained Earnings 2,200 To close Income Summary account 4. Retained Earnings 7,000 Dividends 7,000 4.
Answer is in the packet.
On the income statement, a merchandising operation has to reflect the cost of the goods they buy and sell and the service does not. Gross margin is the difference between net sales and the cost of goods sold on the income statement. Gross margin is important because it must be greater than operating expenses for the company to earn profit. They must take a physical count. So you can keep an eye on how much is coming back in order to determine customer satisfaction and quality control.