A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Wilson Peters,Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances. )
A)$16,780 debit.
B)$7,180 credit.
C)$16,780 credit.
D)$18,280 credit.
E)$23,780 credit.

Question

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Wilson Peters,Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances. ) 
A)$16,780 debit. 
B)$7,180 credit. 
C)$16,780 credit. 
D)$18,280 credit. 
E)$23,780 credit.

Quizplus · Accepted Answer

First, we need to calculate the balance of the Income Summary account. 
Revenue - Expenses = Income Summary balance 
$31,290 - $11,510 = $19,780 (credit balance in Income Summary)

Next, we need to transfer the balance of Income Summary to Wilson Peters, Capital. 
Since the balance of Income Summary is a credit, we need to debit it to decrease it to zero, and credit Wilson Peters, Capital for the same amount. 
Therefore, the entry to close Income Summary is:

Income Summary $19,780 (credit) 
Wilson Peters, Capital $19,780 (credit)

So, the amount posted to Wilson Peters, Capital in the process of closing the Income Summary account is $19,780 (credit), which is option C.

A Company's Ledger Accounts and Their End-Of-Period Balances Before Closing