Use the following worksheet to answer the following questions. Based on the preceding trial balance, the entry to close income summary would be:
A) debit C. Finley, Capital $50,000; credit Income Summary $50,000
B) debit Income Summary $155,000; credit C. Finley, Capital $155,000
C) debit Income Summary $50,000, credit C. Finley, Capital $50,000
D) debit C. Finley, Capital $9,000; credit Income Summary $9,000

Question

Use the following worksheet to answer the following questions.  Based on the preceding trial balance, the entry to close income summary would be:
A) debit C. Finley, Capital $50,000; credit Income Summary $50,000 
B) debit Income Summary $155,000; credit C. Finley, Capital $155,000 
C) debit Income Summary $50,000, credit C. Finley, Capital $50,000 
D) debit C. Finley, Capital $9,000; credit Income Summary $9,000

Quizplus · Accepted Answer

The entry to close income summary transfers the balance of the income and expense accounts to the owner's capital account. In this case, the income summary has a credit balance of $50,000, which represents the net income for the period. To close the income summary, we need to debit it for $50,000 and credit C. Finley, Capital for $50,000. This will increase the owner's equity in the business by the amount of the net income. Option A and B are incorrect because they do not reflect the correct balance of the Income Summary account. Option D is incorrect because it does not take into account the total net income for the period.

Use the Following Worksheet to Answer the Following Questions