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20 February, 16:23

Income Summary has a credit balance of $12,000 in J. Spencer, Co., after closing revenue and expense accounts. The entry to close Income Summary is A: debit Income Summary $12,000, credit Owner's Capital $12,000. B: credit Income Summary $12,000, debit Owner's Drawing $12,000. C: debit Income Summary $12,000, credit Owner's Drawing $12,000. D: credit Income Summary $12,000, debit Owner's Capital $12,000.

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  1. 20 February, 18:24
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    The correct option is None of the above options.

    Explanation:

    When closing entry is posted for the Income summary, then the income summary account is debited and the retained earnings account is credited when it is a company. So, in this case, it is a company, then the journal entry would be:

    Income Summary A/c ... Dr $12,000

    To Retained Earnings A/c ... Cr $12,000

    Earlier the income summary account has a credit balance, in order to close the account, then it will be debited with the same amount.

    Hence, None of the given options is correct.
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