Question

The ledger of Mai Company includes the following accounts with normal balances: Common Stock, $10,200; Dividends, $1,400; Services Revenue, $25,000; Wages Expense, $14,400; and Rent Expense, $4,000. Prepare the necessary closing entries from the available information at December 31.

Answer 1

The journal entries are as follows:

(i) On December 31,

Service revenue A/c Dr. $25,000

To income summary A/c $25,000

(To record the service revenue)

(ii) On December 31,

Income summary A/c Dr. $18,400

To wages expense $14,400

To rent expense $4,000

(To record the rent and wages expense)

(iii) On December 31,

Income summary A/c($25,000 - $18,400) Dr. $6,600

To Retained earnings $6,600

(To record the Retained earnings)

(iv) On December 31,

Retained earnings A/c Dr. $1,400

To dividend A/c $1,400

(To record the dividend)