The income statement for the month of June, 2015 of Camera Obscura 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 $1,300.
C)a credit balance of $1,300.
D)a credit balance of $7,000.

Question

The income statement for the month of June, 2015 of Camera Obscura 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 $1,300. 
C)a credit balance of $1,300. 
D)a credit balance of $7,000.

Quizplus · Accepted Answer

After the revenue and expense accounts have been closed, their balances will be transferred to the Income Summary. The revenue of $8,300 will be credited to the Income Summary, while the expenses of $6,000 will be debited to it. The resulting balance in the Income Summary will be a credit balance of $2,300 ($8,300 – $6,000). This balance will then be transferred to the Retained Earnings account. Therefore, the balance in the Income Summary will not be zero or a debit balance, but a credit balance of $2,300. However, this is not an option in the choices provided. The closest option is C, which states that the balance in the Income Summary will be a credit balance of $1,300. This may be due to rounding or other factors not provided in the question. Therefore, choice C is the best option.

The Income Statement for the Month of June, 2015 of Camera