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 Revenue $64,000; credit Expenses $53,000.
C)debit Income Summary $11,000; credit Drawing $11,000.
D)debit Income Summary $11,000; credit Capital $11,000.

Question

Quizplus · Accepted Answer

The third closing entry involves transferring the balance of the Income Summary account to the Capital account. Since the credit balance in the Income Summary account is greater than the debit balance, there is a net income for the period. Therefore, the Income Summary account is debited and the Capital account is credited for the same amount, which is $11,000 based on the difference between the debit and credit amounts in the first two closing entries.

The First Two Closing Entries to the Income Summary Account