The first two closing entries to the Income Summary account indicate a debit of $47,000 and a credit of $41,000. The third closing entry would be:
A)debit Income Summary $41,000; credit Expenses $41,000
B)debit Capital $6,000; credit Income Summary $6,000
C)debit Income Summary $6,000; credit Drawing $6,000
D)debit Income Summary $47,000; credit Capital $47,000

Question

Quizplus · Accepted Answer

The first two closing entries show that there is an excess of debits over credits in the Income Summary account, indicating a net income of $6,000 ($47,000 - $41,000 = $6,000). The third closing entry is used to close the Income Summary account by transferring the net income or net loss to the Capital account. Since there is a net income of $6,000, we need to credit Income Summary and debit Capital by the same amount. Therefore, the correct option is B, which shows a debit to Capital and a credit to Income Summary for $6,000.

The First Two Closing Entries to the Income Summary Account