Question

At January 1, 2022, Spiderland Company reported a balance of $20,000 in the Owner’s Capital account. Spiderland Company earned revenues of $50,000 and incurred expenses of $32,000 during 2022. The company had owner drawings of $10,000 during the year and there were no new investments during the year.

Prepare the entries to close Income Summary and the Owner’s Drawings account at December 31, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Dr $50,000 Closing entries Revenues Alc To Income summary Alc (Being revenue accounts closed) $50,000 Income summary A/C Dr $32,000 To Expenses Alc Being expenses accounts closed) $32,000 Dr $10,000 Owner drawings Alc To Owner's capital Alc (Being drawings account closed) $10.000