Rose Company earned revenues of $17,000 and incurred expenses of $4500.The drawings of Mary Rose,the owner,were $1000.What is the balance in the Income summary account prior to closing profit or loss to the Rose,capital account?

Question

Quizplus · Accepted Answer

The balance in the Income summary account can be calculated as:
Revenues - Expenses = $17,000 - $4,500 = $12,500
Since Mary Rose's drawings are a personal expense and not a business expense, they are not included in the calculation. 
Therefore, the Income summary account has a credit balance of $12,500 which will be closed to the Rose, Capital account as an increase in owner's equity.

Rose Company Earned Revenues of $17,000 and Incurred Expenses of $4500.The