Income Summary,before closing to Capital,contains a debit balance of $110 and a credit balance of $200.What is the entry to close Income Summary to Capital?
A)Debit Income Summary $100;credit Capital $200
B)Debit Income Summary $86;credit Capital $110
C)Debit Capital $90;credit Income Summary $90
D)Debit Income Summary $90;credit Capital $90

Question

Quizplus · Accepted Answer

We need to close the debit balance in Income Summary to Capital, so we debit Income Summary for $110 and credit Capital for $110 to balance the entry. However, since there is also a credit balance of $200 in Income Summary, we need to transfer that to Capital as well. We credit Income Summary for $200 and debit Capital for $200 to balance the entry. Therefore, the entry to close Income Summary to Capital is: Debit Income Summary $110; credit Capital $110; credit Income Summary $200; debit Capital $200, which simplifies to Debit Income Summary $90; credit Capital $90. The correct choice is D.

Income Summary,before Closing to Capital,contains a Debit Balance of $110