Given the following end-of-period figures: Service Revenue of \$8,000, Salaries Expense of \$3,000, and Rent Expense of \$1,000, which of the following is the correct journal entry to close the revenue and expense accounts at the end of the period?

Step 3: Close the expense accounts. For Salaries Expense ( $\mathrm{3,000}$ ) and Rent Expense ( $\mathrm{1,000}$ ), debit the Income Summary account for the total of these expenses ( $\mathrm{4,000}$ ), and credit each expense account for their respective balances. This transfers the expense balances to the Income Summary account.

Step 4: Close the Income Summary account to Retained Earnings. After transferring revenues and expenses to the Income Summary account, the balance in Income Summary represents the net income ( $\mathrm{4,000}$ ). Debit the Income Summary account for this amount and credit Retained Earnings to transfer the net income to the equity section of the balance sheet.