Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $200,000,

Question

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $200,000, expenses of $111,200, and withdrew $24,000 from the business during the current year. The owner’s capital account before closing had a balance of $312,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Debit T. Westmont, Capital $312,000; credit Income Summary $312,000

Debit T. Westmont, Capital $64,800; credit Income Summary $64,800

Debit Income Summary $64,800; credit T. Westmont, Capital $64,800

Debit Income Summary $88,800, credit T. Westmont, Capital $88,800

Debit T. Westmont, Capital $88,800, credit Income Summary $88,800

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $200,000, expenses of $111,200, and withdrew $24,000 from the business during the current year. The owner’s capital account before closing had a balance of $312,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:

Debit T. Westmont, Capital $312,000; credit Income Summary $312,000

Debit T. Westmont, Capital $64,800; credit Income Summary $64,800

Debit Income Summary $64,800; credit T. Westmont, Capital $64,800

Debit Income Summary $88,800, credit T. Westmont, Capital $88,800

Debit T. Westmont, Capital $88,800, credit Income Summary $88,800

Explanation / Answer

D.Debit income summary $88,800 , credit T.westmont capita $88,800.

the following is the required closing entry:

the drawings of $24,000 will be debited to westmont capital account and not the income summary account.

Income summary a/c $88,800 ..........To T westmont capital $88,800 (income = $200,000 - $111,200 =>$88,800)

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