The adjusted balances for Tomas Co. are listed below.
Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J. Tomas, Capital, $30,000
J. Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close the drawing account would involve a
A) credit to J. Tomas, Drawing, $10,000.
B) debit to Income Summary, $10,000.
C) credit to J. Tomas, Capital, $10,000.
D) debit to Income from Services, $10,000.

Question

The adjusted balances for Tomas Co. are listed below. 
Cash, $20,000
Accounts Receivable, $2,500
Prepaid Insurance, $3,500
Equipment, $15,000
Accumulated Depreciation, $2,000
Accounts Payable, $4,000
J. Tomas, Capital, $30,000
J. Tomas, Drawing, $10,000
Income from Services, $35,000
Wages Expense, $12,000
Rent Expense, $8,000
The entry to close the drawing account would involve a
A) credit to J. Tomas, Drawing, $10,000.
B) debit to Income Summary, $10,000.
C) credit to J. Tomas, Capital, $10,000.
D) debit to Income from Services, $10,000.

Quizplus · Accepted Answer

The drawing account is closed by crediting it to reduce its balance to zero, and the corresponding debit is made to the capital account to reflect the reduction in owner's equity.

The Adjusted Balances for Tomas Co