A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)
A)$16,780 debit
B)$7,180 credit
C)$16,780 credit
D)$18,280 credit
E)$23,780 credit

Question

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) 
A)$16,780 debit 
B)$7,180 credit 
C)$16,780 credit 
D)$18,280 credit 
E)$23,780 credit

Quizplus · Accepted Answer

To find the amount that will be posted to Retained Earnings in the process of closing the Income Summary account, we need to calculate the balance of the Income Summary account first.

The balance of the Income Summary account is the difference between the total revenue and the total expenses:

Total revenue - Total expenses = Income Summary

$112,300 - $95,520 = $16,780

Next, we need to transfer this balance to Retained Earnings by making a closing entry. Since the balance of the Income Summary account is a credit balance, we need to debit the Income Summary account and credit Retained Earnings:

Income Summary $16,780 debit
Retained Earnings $16,780 credit

Therefore, the answer is option C, which shows the amount of $16,780 being posted to Retained Earnings.

A Company's Ledger Accounts and Their End-Of-Period Balances Before Closing