The income statement for the year 2016 of Bugati Co. contains the following information: $\begin{array}{lr}
\text { Revenues } &&\$73,000 \
\text { Expenses: } & \
\text { Salaries and Wages Expense } & \$ 43,000 \
\text { Rent Expense } &12,000 \
\text { Advertising Expense } & 11,000 \
\text { Supplies Expense } &6,000 \
\text { Utilities Expense }& 3,500\
\text { Insurance Expense }&4,000 \
\quad \text { Total expenses } &&79,500 \
\text { Net income (loss)} &&\$(6,500)
\end{array}$
After all closing entries have been posted the Income Summary account will have a balance of
A) $0.
B) $6500 debit.
C) $6500 credit.
D) $79500 credit.

Question

The income statement for the year 2016 of Bugati Co. contains the following information: $\begin{array}{lr}
\text { Revenues } &&\$73,000 \
\text { Expenses: } & \
\text { Salaries and Wages Expense } & \$ 43,000 \
\text { Rent Expense } &12,000 \
\text { Advertising Expense } & 11,000 \
\text { Supplies Expense } &6,000 \
\text { Utilities Expense }& 3,500\
\text { Insurance Expense }&4,000  \
\quad \text { Total expenses } &&79,500 \
\text { Net income (loss)} &&\$(6,500)
\end{array}$
 After all closing entries have been posted the Income Summary account will have a balance of
A) $0.
B) $6500 debit.
C) $6500 credit.
D) $79500 credit.

Quizplus · Accepted Answer

After all closing entries have been posted, the Income Summary account will have a balance of $0 because revenues and expenses are closed out to this account, and then the balance of the account is closed to Retained Earnings, leaving it with a $0 balance.

The Income Statement for the Year 2016 of Bugati Co