The income statement for the month of June, 2010 of Ramirez Enterprises contains the following information: The entry to close Income Summary to Ramirez, Capital includes
A) a debit to Revenue for $7,000.
B) credits to Expenses totalling $3,600.
C) a credit to Income Summary for $3,400
D) a credit to Ramirez, Capital for $3,400.

Question

The income statement for the month of June, 2010 of Ramirez Enterprises contains the following information:  The entry to close Income Summary to Ramirez, Capital includes
A) a debit to Revenue for $7,000. 
B) credits to Expenses totalling $3,600. 
C) a credit to Income Summary for $3,400 
D) a credit to Ramirez, Capital for $3,400.

Quizplus · Accepted Answer

Closing entries are made at the end of a period to transfer the balances of temporary accounts (revenue, expenses, and dividends) to the permanent capital account. The entry to close Income Summary to Ramirez, Capital involves a credit to Income Summary for the total of all revenues and a debit to Income Summary for the total of all expenses. The resulting balance in Income Summary is then transferred to the permanent capital account, Ramirez, Capital, with a credit. Therefore, the correct choice is D, a credit to Ramirez, Capital for $3,400.

The Income Statement for the Month of June, 2010 of Ramirez