Question

If you are closing out a company how would you handle retained earnings?

Example: If I opened a company with my own cash for $1,000.00.

I know the entry would be:

$1,000.00 DB to cash

$1,000.00 CR to Retained Earnings

If I used the $1,000.00 cash to pay bills and then had no money left and closed the business.

Would the following be my closing entry for retained earnings:

$1,000.00 DB to close out retained earnings

$1,000.00 CR to the income summary to close business