1. K. Canopy, the proprietor of Canopy Services, withdrew $5,100 from the busine

Question

1. K. Canopy, the proprietor of Canopy Services, withdrew $5,100 from the business during the current year. The entry to close the withdrawals account at the end of the year is:

2. Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $196,000, expenses of $109,200, and withdrew $22,400 from the business during the current year. The owner’s capital account before closing had a balance of $308,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Explanation / Answer

1) k.canopy,the proprietor of canopy service withdrew $5100 from the business during the current year

Entry to close withdrawal account

Capital (proprietor personal) A/c $5100(dr)

To cash account $5100(cr)

2)   begining retained earnings+ Revenue-expenses-dividents=ending retained earnings

   $308,000+$196,000-$109,200-$22,400=$372,400

Entry

Income summary account(dr) $ $372,400

                revenue account(cr) $372,000

Owners capital account after closing:

Balance before closing =$308,000

Add: net profit current year ($196,000-$109,200) =$86,800

Less: withdrawls =-$22,400

Closing capital account balance =$372,400

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