Question

Income Summary has a credit balance of $12,000 in J. Spencer, Co., after closing revenue and expense accounts. The entry to close Income Summary is A: debit Income Summary $12,000, credit Owner’s Capital $12,000. B: credit Income Summary $12,000, debit Owner’s Drawing $12,000. C: debit Income Summary $12,000, credit Owner’s Drawing $12,000. D: credit Income Summary $12,000, debit Owner’s Capital $12,000.

Answer 1

Answer:

The correct option is None of the above options.

Explanation:

When closing entry is posted for the Income summary, then the income summary account is debited and the retained earnings account is credited when it is a company. So, in this case, it is a company, then the journal entry would be:

Income Summary A/c................Dr    $12,000

    To Retained Earnings A/c..............Cr     $12,000

Earlier the income summary account has a credit balance, in order to close the account, then it will be debited with the same amount.

Hence, None of the given options is correct.