The Income Summary account has an $8,000 credit balance prior to being closed to the owner's...
The Income Summary account has an $8,000 credit balance prior to being closed to the owner's Capital account. The owner's Capital account had a $32,000 beginning balance and a $36,500 ending balance. Determine the amount of the owner's drawing during the current period.
Select one:
a. $8,500
b. $3,500
c. $2,500
d. $4,500
e. $8,000
Homework Answers
| Ans. | Option b $3,500 | ||
| *Explanations and Calculations: Credit balance of income summary is equal to the amount | |||
| of net income. No additional investments are made by owner. | |||
| Owner's drawings would be calculated by the following way: | |||
| Particulars | Amount | ||
| Beginning balance of Owner's capital | $32,000 | ||
| Add: Net income | $8,000 | ||
| Less: Ending balance of Owner's capital | -$36,500 | ||
| Owner's Drawings | $3,500 | ||
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