Question

The income summary account shows debits of $39,000 and credits of $20,000. This results in a:

a. Net income of $19,000
b. Net loss of $19,000
c. Net income of $59,000
d. Net loss of $59,000

Answer 1

The income summary account with debits of $39,000 and credits of $20,000 results in a net loss of $19,000.

Step-by-step explanation:

The question is asking about the outcome on the income summary account based on the debits and credits recorded. In accounting, the income summary account is used to summarize revenue and expenses for a specific period. If debits are greater than credits, it indicates that expenses exceed revenue, resulting in a net loss. Conversely, if credits are greater than debits, it shows that revenue exceeds expenses, which constitutes a net income.

In this case, the income summary account shows debits of $39,000 and credits of $20,000. By subtracting credits from debits ($39,000 - $20,000), we get a net loss of $19,000. Therefore, the correct answer is (b) Net loss of $19,000