After posting the entries to close all revenue and expense accounts, Hatfield Company's Income Summary account has a credit balance of $6,000, and its Hatfield, Withdrawals account has a debit balance of $2,500. These balances indicate that net income for the current accounting period amounted to $3,500.

Question

Quizplus · Accepted Answer

The net income for the current accounting period is actually $6,000, as indicated by the credit balance in the Income Summary account before considering withdrawals. Withdrawals do not affect the calculation of net income; they represent distributions to the owner and are separate from the calculation of net income or loss.

After Posting the Entries to Close All Revenue and Expense