Question

the first two closing entries to the income summary account indicate a debit of $55,750 and a credit of $67,300. the third closing entry would be: multiple choice debit income summary $11,550; credit capital $11,550. debit income summary $11,550; credit drawing $11,550. debit capital $11,550; credit income summary $11,550. debit drawing $11,550; credit income summary $11,550.

Answer 1

The income summary account's first two closing entries show a debit of $55,750 and a credit of $67,300. A debit income summary of $11,550 and a credit capital of $11,550 would make up the third closing entry. The right response in this case is option A.

If the income summary's net balance is positive, it indicates the business made a profit for the year; if it is negative, that indicates the business suffered a loss. It lists all earnings and costs related to both operational and non-operating operations.

Debit income summary 11,500, and credit capital $11,500        

Statement showing Computations    

Particulars                               Debit           Credit

Income Summary Dr               11,500.00  

To retained earnings/ Capital             11,500.00

(67,000 - 55,500)

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