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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

1 answer

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.

  1. 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