The income statement for the month of June, 2014 of Taylor Enterprises contains the following information: After the revenue and expense accounts have been closed, the balance in Income Summary will be
A) ₤0.
B) a debit balance of ₤3,900.
C) a credit balance of ₤3,900.
D) a credit balance of ₤8,000.

Question

The income statement for the month of June, 2014 of Taylor Enterprises contains the following information:  After the revenue and expense accounts have been closed, the balance in Income Summary will be
A) ₤0. 
B) a debit balance of ₤3,900. 
C) a credit balance of ₤3,900. 
D) a credit balance of ₤8,000.

Quizplus · Accepted Answer

The income statement indicates that the total revenue is ₤14,000 and the total expenses are ₤10,100. Subtracting the expenses from the revenue, we get ₤3,900 net income. This amount will be transferred to the Income Summary account as a credit balance when the revenue and expense accounts are closed. Therefore, the correct answer is a credit balance of ₤3,900 in Income Summary.

The Income Statement for the Month of June, 2014 of Taylor