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 Wilson Peters, Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)$\begin{array}{lr}
\text { Wilson Peters, Capital } & \$ 7,000 \
\text { Wilson Peters, Withdrawals } & 9,600
\end{array}$
$\begin{array} { l r }
\text { Revenue } & 29,000 \
\text { Rent expense } & 3,600 \
\text { Salaries expense } &7,200\
\text { Insurance expense } & 920 \
\text { Depr.Expense-equipment } &500 \
\text { Accum depr.-equipment } & 1,500
\end{array}$

A) $7,180 credit.
B) $16,780 credit.
C) $16,780 debit.
D) $23,780 credit.
E) $18,280 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 Wilson Peters, Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)$\begin{array}{lr}
\text { Wilson Peters, Capital } & \$ 7,000 \
\text { Wilson Peters, Withdrawals } & 9,600
\end{array}$
  $\begin{array} { l r } 
\text { Revenue } & 29,000 \
\text { Rent expense } &  3,600  \
\text { Salaries expense } &7,200\
\text { Insurance expense } & 920  \
\text { Depr.Expense-equipment } &500 \
\text { Accum depr.-equipment } & 1,500
\end{array}$

A) $7,180 credit.
B) $16,780 credit.
C) $16,780 debit.
D) $23,780 credit.
E) $18,280 credit.

Quizplus · Accepted Answer

To close the Income Summary account, revenues and expenses are transferred. The revenue account has a credit balance of $29,000, while the expenses have a combined debit balance of $12,220 ($3,600 + $7,200 + $920 + $500). Therefore, the Income Summary will have a credit balance of $16,780 ($29,000 - $12,220). This amount will be transferred to Wilson Peters, Capital, increasing its credit balance to $23,780 ($7,000 + $16,780).