Question

The ledger of Mai Company includes the following accounts with normal balances: Common Stock $9,000;
Dividends $800;
Services Revenue $13,000;
Wages Expense $8,400;
Rent Expense $1,600.
Prepare the necessary closing entries from the available information at December 31.

Answer 1

  Answer: Please see explanation for answer

Explanation:

Journal to close Revenue  account

Date               Accounts and explanation         Debit               Credit

31 December     Service Revenue                     $13,000

                  Income Summary                                                     $13,000

Journal to close expense account

Date               Accounts and explanation          Debit               Credit

31 December        Income Summary                $10,000

                 Wages Expenses                                                       $8,400

                   Rent expenses                                                         $1,600

 Journal to close Income Summary account

Date               Accounts and explanation          Debit               Credit

31 December        Income Summary                $3,000

                          Retained earnings                                         $3,000

Calculation

Retained Earnings =Services Revenue- (wages expense + rent expense)

$13,000 -$10,000-= $3,000

Journal to close Dividend  account

Date               Accounts and explanation          Debit               Credit

31 December        Retained earnings              $800

                                    Dividends                                                $800