Question

Daniel Repair Company’s beginning capital account is $1,500. At the end of the closing cycle, the capital balance was $2,600. What would be the closing entry from the income summary account if there were no withdrawals?

Daniel Capital Account $1,100 Income Summary $1,100

Daniel Capital Account $2,600 Income Summary $2,600

Income Summary $2,600 Daniel Capital Account $2,600

Income Summary $1,100 Daniel Capital Account $1,100

Answer 1

To determine the correct closing entry from the income summary account, we first need to calculate the net income for the period.

1. **Beginning Capital:** $1,500
2. **Ending Capital:** $2,600

Next, we calculate the increase in capital:

\[
\text{Increase in Capital} = \text{Ending Capital} - \text{Beginning Capital} = 2,600 - 1,500 = 1,100
\]

Since there were no withdrawals, this increase in capital is entirely due to net income.

3. **Net Income:** $1,100

The closing entry to transfer the net income from the income summary account to the capital account is:

\[
\text{Income Summary} \$1,100 \quad \text{to} \quad \text{Daniel Capital Account} \$1,100
\]

So, the correct entry from the options provided would be:

**Income Summary $1,100 Daniel Capital Account $1,100**