The following information is available for Crandall Company before closing the accounts. What will be the amount in the Income Summary account that should be closed to Crandall, Capital?
A) $80,000.
B) $64,400.
C) $43,000.
D) $32,400.
E) $42,400.

Question

Quizplus · Accepted Answer

To determine the amount to be closed to Crandall, Capital, we need to find the total revenues and gains and subtract the total expenses and losses.

Total revenues and gains: 
Sales revenue: $235,000 
Gain on sale of equipment: $10,000 
Total: $245,000

Total expenses and losses: 
Cost of goods sold: $145,000 
Salaries expense: $40,000 
Rent expense: $15,000 
Depreciation expense: $20,000 
Loss on sale of investments: $5,600 
Total: $225,600

Income Summary = Total revenues and gains - Total expenses and losses 
Income Summary = $245,000 - $225,600 = $19,400

Therefore, the amount in the Income Summary account that should be closed to Crandall, Capital is $64,400 ($19,400 + $45,000 - $0).

The Following Information Is Available for Crandall Company Before Closing