Use the work sheet for Finley Company to answer the questions that follow.

The entry to close Income Summary would be
A)debit Retained Earnings,$50,000;credit Income Summary,$50,000
B)debit Income Summary,$155,000;credit Retained Earnings,$155,000
C)debit Income Summary,$50,000;credit Retained Earnings,$50,000
D)debit Retained Earnings,$9,000;credit Income Summary,$9,000

Question

Use the work sheet for Finley Company to answer the questions that follow.

The entry to close Income Summary would be
A)debit Retained Earnings,$50,000;credit Income Summary,$50,000 
B)debit Income Summary,$155,000;credit Retained Earnings,$155,000 
C)debit Income Summary,$50,000;credit Retained Earnings,$50,000 
D)debit Retained Earnings,$9,000;credit Income Summary,$9,000

Quizplus · Accepted Answer

To close Income Summary, we need to debit Income Summary and credit Retained Earnings with the same amount of net income for the period, which is $50,000 in this case. So, the entry would be debit Income Summary for $50,000 and credit Retained Earnings for $50,000. A, B, and D are incorrect because they do not follow the rule of debiting Income Summary and crediting Retained Earnings with net income.

Use the Work Sheet for Finley Company to Answer the Questions