This case uses both the income statement (statement of operations) and the balance sheet of Amazon.com. It will help you understand the closing process of a business.

Requirements 

1. Journalize Amazon.com’s closing entries for the revenues and expenses of 2007. Show all amounts in millions as in the Amazon financial statements. You may be unfamiliar with certain revenues and expenses, but treat each item on the income statement as either a revenue or an expense. For example, Net sales is the first revenue, and Interest income is also a revenue. The last revenue is Cumulative Effect of Change in Accounting Principle. A loss is like an expense. In your closing entries ignore all subtotals such as Gross Profit, Total Operating Expenses, and Net Loss.
2 Create a T-account for the Income summary, post to that account, and then close the Income summary. How much was closed to Retained earnings ? How is the amount that was closed to Retained earnings labeled on the income statement?