A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Tricia DeBarre,Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

A)$16,780 debit.
B)$ 7,180 credit.
C)$16,780 credit.
D)$18,280 credit.
E)$23,780 credit.

Question

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Tricia DeBarre,Capital in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

A)$16,780 debit. 
B)$ 7,180 credit. 
C)$16,780 credit. 
D)$18,280 credit. 
E)$23,780 credit.

Quizplus · Accepted Answer

To find out the amount that will be posted to Tricia DeBarre, Capital, we need to close the revenue and expenses accounts to the Income Summary account first. Adding the revenue accounts gives us total revenue of $117,740 (81,500 + 16,020 + 20,220). Subtracting the total expenses of $100,960 (47,120 + 3,480 + 50,360) from the total revenue gives us a net income of $16,780.
Since the Income Summary account has a credit balance of $16,780, we need to post this amount to the capital account. Since we are closing the Income Summary account, we are transferring this amount to the owner's equity section of the balance sheet, which increases the owner's equity. Since Tricia DeBarre, Capital, is an equity account, we need to credit it for $16,780. Therefore, the correct answer is C.

A Company's Ledger Accounts and Their End-Of-Period Balances Before Closing