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After all adjusting entries have been performed, closing entries are required for all temporary accounts. Sales, income accounts, purchases returns & allowances, and purchases discounts are debited to close, and the Income Summary account is credited for the total. Expenses, purchases, sales discounts, sales returns & allowances, and transportation in are all credited to close, and the Income Summary account is debited for the total. The Income Summary debit or credit balance is closed to the Owner's Equity or Retained Earnings account. The Dividends account is credited and Retained Earnings debited if any dividends were paid during the year.
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