Question

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $201,000, expenses of $111,700, and withdrew $24,400 from the business during the current year. The owner’s capital account before closing had a balance of $313,000. The ending owner’s capital balance after closing is:______
A. Debit Retained Earnings $89,300, credit Income Summary $89,300
B. Debit Retained Earnings $313,000; credit Income Summary $313,000
C. Debit Income Summary $64,900; credit Retained Earnings $64,900

Answer 1

Answer:

C. Debit Income Summary $64,900; credit Retained Earnings $64,900

Explanation:

revenues          201,000

expenses         (111,700)

income:             89,300

withdrawals    (24,400)  

net:                    64,900

The net income and withdrawlas will be closest against income summary and then, this balance will be transfered into retained earnings