The first two closing entries to the Income Summary account indicate a debit of $53,000 and a credit of $64,000.The third closing entry would be
A) debit Capital $11,000;credit Income Summary $11,000.
B) debit Income Summary $11,000;credit Capital $11,000.
C) debit Revenue $64,000;credit Expenses $53,000.
D) debit Income Summary $11,000;credit Drawing $11,000.

Question

Quizplus · Accepted Answer

The third closing entry is to close the balance of the Income Summary account into the owner's Capital account. Since the credit side of the Income Summary account is higher than the debit side, it means that the business has earned a net income of $11,000 during the period. This net income needs to be added to the owner's capital, hence the entry should be a debit to Income Summary and a credit to Capital, for $11,000 each. Therefore, option B is the correct choice.

The First Two Closing Entries to the Income Summary Account