Question

After posting the entries to close all revenue and expense accounts, Marker Company's Income Summary account has a credit balance of $6,800, and its Marker, Withdrawals account has a debit balance of $2,900. These balances indicate that net income for the current accounting period amounted to $3,900.
a. True
b. False

Answer 1

Answer:

False

Explanation:

Given that

Credit balance of income summary account = $6,800

Debit balance of Withdrawals account = $2,900

Since the credit balance of income summary denotes the net income for the particular period and the  debit balance of the withdrawn amount reflects that it is to be shown in the retained earning statement

The journal entry would be

Income summary A/c Dr $6,800

                  To Retained earning $6,800

(Being the difference is credited to retained earning)