Income Summary has a credit balance of $12,000 in J. Wenger Co. after closing revenues and expenses. The entry to close Income Summary is
A) credit Income Summary $12,000, debit Retained Earnings $12,000.
B) credit Income Summary $12,000, debit Dividends $12,000.
C) debit Income Summary $12,000, credit Dividends $12,000.
D) debit Income Summary $12,000, credit Retained Earnings $12,000.

Question

Quizplus · Accepted Answer

The credit balance in the Income Summary account represents the net income for the period. To close this account, we need to debit Income Summary and credit Retained Earnings (or the owner's equity account). Therefore, the correct entry to close Income Summary is to debit Income Summary $12,000 and credit Retained Earnings $12,000.

Income Summary Has a Credit Balance of $12,000 in J