Short Answer 
To close income statement accounts at the period’s end, identify relevant accounts such as Fees Earned, Depreciation Expense, and Salaries Expense. Prepare a closing entry by debiting these accounts and crediting Retained Earnings, then post the entry to accurately reflect the company’s profitability in financial statements.
Step 1: Identify Income Statement Accounts
Begin by recognizing the specific accounts that will be closed at the end of the accounting period. In this context, the relevant accounts include Fees Earned, Depreciation Expense, and Salaries Expense. These accounts reflect the revenues generated and the expenses incurred during the period, and they need to be transferred to retained earnings.
- Fees Earned
- Depreciation Expense
- Salaries Expense
Step 2: Prepare the Closing Entry
To execute the closing entry, you must debit each identified income statement account by their respective balances and credit the Retained Earnings account. This action effectively resets the income statement accounts to zero for the new accounting period, while simultaneously transferring the net balance into retained earnings, which reflects the overall profitability.
- Debit Fees Earned: $56,000
- Debit Depreciation Expense: $25,000
- Debit Salaries Expense: $23,000
- Credit Retained Earnings: $104,000
Step 3: Post the Closing Entry
Finally, record the closing entry in your accounting system or ledger. This step solidifies the transfer of the balances into retained earnings, ensuring that your financial statements accurately reflect the company’s profitability over the period. Ensuring that these steps are accurately followed will promote clearer financial reporting in the future.