Question

Dogwood company earned revenues of $19,000 and incurred expenses of $7,000. the owner made withdrawals of $3,500. what is the balance in the income summary account prior to closing net income or loss to the owner, capital account?

Answer 1

Calculation of balance in the income summary account prior to closing net income or loss to the owner’s capital account:

It is given that Dogwood Company earned revenues of $19,000 and incurred expenses of $7,000. The owner made withdrawals of $3,500.

Hence the balance in the income summary account prior to closing net income or loss to the owner’s capital account shall be as follows:

= Revenues – Expenses

= 19000-7000

= $12,000

Hence the balance in the income summary account prior to closing net income or loss to the owner’s capital account shall be $12,000