The capital account has an ending balance of $17,000 and a beginning balance of $12,500. If withdrawals were $13,500, then the income summary account had a balance of ________ before closing.
A)$18,000 credit
B)$4,500 credit
C)$3,500 credit
D)$18,000 debit

Question

Quizplus · Accepted Answer

The income summary account balance before closing would be $18,000 credit. This is calculated by considering the change in the capital account balance and the withdrawals. The capital account increased by $4,500 ($17,000 ending balance - $12,500 beginning balance). To achieve this increase after accounting for $13,500 in withdrawals, the business must have had $18,000 in income ($4,500 increase + $13,500 withdrawals).

The Capital Account Has an Ending Balance of $17,000 and a Beginning