Income Summary has a credit balance of $19000 in B. Browne Co. after closing revenues and expenses. The entry to close Income Summary is
A) credit Income Summary $19000 debit Owner's Capital $19000.
B) credit Income Summary $19000 debit Owner's Drawings $19000.
C) debit Income Summary $19000 credit Owner's Drawings $19000.
D) debit Income Summary $19000 credit Owner's Capital $19000.

Question

Quizplus · Accepted Answer

Closing income summary involves transferring the balance of income summary to the owner's capital or retained earnings account. Since Income Summary has a credit balance of $19000, it means that the company incurred a net income for the period. Therefore, the entry to close Income Summary is to debit Income Summary for $19000 and credit Owner's Capital for $19000. This will increase Owner's Capital by the amount of net income earned for the period. Choice D is the only option that reflects this entry.

Income Summary Has a Credit Balance of $19000 in B