The accountant of Randy's Flooring has closed all of the temporary income statement accounts. The accountant is now ready to close the Income Summary account. The owner of the company is
R. Car. Using the Income Summary T-account below, determine the correct closing entry the accountant needs to make in order to close the account.
Income Summary

Question

Quizplus · Accepted Answer

The Income Summary account is used to summarize all the temporary income and expense accounts. The balance in the account represents the net income or loss for the period. In order to close the Income Summary account, the balance needs to be transferred to the owner's equity account, which is R. Car, Capital. Since the Income Summary account has a credit balance of $46,000, the closing entry should credit Income Summary for $46,000 and debit R. Car, Capital for $46,000. Thus, the correct answer is D.

The Accountant of Randy's Flooring Has Closed All of the Temporary