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 is to debit Income Summary $50,000 and credit C. Finley, Capital $50,000. This transfers the net income from the income summary account to the owner’s capital account. Option A is incorrect because crediting Income Summary and debiting Capital would reduce the owner's equity by $50,000. Option B is incorrect because it increases the owner's equity by $155,000, which is not supported by the trial balance. Option D is incorrect because it only transfers $9,000 to the owner's capital account, but the net income for the period is $50,000.

Use the Following Worksheet to Answer the Following Questions