Question

The ledger of Mai Company includes the following accounts with normal balances as of December 31: Common Stock $10,800; Dividends $1,700; Services Revenue $31,000; Wages Expense $17,400; and Rent Expense $5,200. Prepare its December 31 closing entries.

Answer 1

Answer:

Explanation:

The closing entries for the following accounts are shown below:

1. Service Revenue A/c Dr  $31,000

                          To Income Summary $31,000

(Being revenue account closed)

2. Income summary A/c Dr $22,600

                               To Wages Expense $17,400

                                To Rent Expense $5,200

(Being expenses accounts are closed)

3. Income summary A/c Dr $8,400

                  To Retained earning $8,400

(Being the difference is credited to retained earning)

4. Retained earnings A/c Dr $1,700

             To Dividend A/c $1,700

(Being dividend account is closed)

The computation of the retained earning is shown below:

= Total revenues - total expenses

= $31,000 - $22,600

= $8,400