The income statement for the month of June 2016 of Snap Shot Inc. contains the following information: $\begin{array}{lr}
\text { Revenues } &&\$7,300 \
\text { Expenses: } & \
\text { Salaries and Wages Expense } & \$ 3,000 \
\text { Rent Expense } & 1,300 \
\text { Advertising Expense } & 700 \
\text { Supplies Expense } & 200 \
\text { Insurance Expense } & 100 \
\quad \text { Total expenses } &&5,300 \
\text { Net income } &&\$2,000
\end{array}$ The entry to close Income Summary to Owner's Capital includes
A) a debit to Revenues for $7300.
B) credits to Expenses totalling $5300.
C) a credit to Income Summary for $2000
D) a credit to Owner's Capital for $2000.

Question

Quizplus · Accepted Answer

The entry to close Income Summary to Owner's Capital includes a credit to Owner's Capital for the net income amount, which in this case is $2000. This represents the increase in the owner's equity due to the company's profitability in June. Choices A and B are incorrect because they represent the individual revenues and expenses, which are closed out separately to Income Summary. Choice C is incorrect because Income Summary is a temporary account used to summarize the revenues and expenses for the period and is closed out to Owner's Capital at the end of the period.

The Income Statement for the Month of June 2016 of Snap