Closing Entries with Net Income Assume that the entry closing total revenues of $278,600 and total expenses of $207,900 has been made for the year ending December 31. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $322,000 and Teresa Schafer, Drawing has a balance of $27,000. a. Journalize the entry required to close the Teresa Schafer, Drawing account. Teresa Schafer, Capital 27,000 Teresa Schafer, Drawing 27,000 Feedback Check My Work a. The net effect of the Income summary account needs to be determined. If the company shows net income, the net balance is a credit and it is a net loss if the net balance is a debit. The offsetting account to complete the closing entry for Income Summary is the owner's capital account. Also in closing, the drawing account is closed to (or decreases) the owner's capital account instead of Income Summary. b. Determine the amount of Teresa Schafer, Capital at the end of the period. 70,700 x SI Feedback Check My Work b. Similar to the Statement of Owner's Equity, the amount of Teresa Schafer, Capital can be determined by the following equation