Question

The ledger of Mai Company includes the following accounts with normal balances: D. Mai, Capital $9,600; D. Mai, Withdrawals $1,100; Services Revenue $19,000; Wages Expense $11,400; and Rent Expense $2,800. Prepare the necessary closing entries from the available information at December 31.

Answer 1

Dec.31 Service Revenue 19,000

Income Summary 19,000

To close revenue account

Dec.31 Income Summary 14,200

Wages Expense 11,400

Rent Expense 2,800

To close expenses account

Dec.31 Income Summary 4,800

D. Mai, Capital 4,800

To close summary account

Dec.31 D. Mai, Capital 1,100

D. Mai, Drawings 1,100

To close Drawings account

Explanation: There are four accounts need to close Temporary Account: revenues, expenses, drawings and Income summary. To keep in mind that when the companies do the closing entries that they want to make the temporary accounts to be 0 balance to start a new period.

Revenues > Expenses--> Profit

D. Mai, Capital Balance at Dec.31 $13,300

** (D. Mai, Capital $9600+ Profit $4800 - Drawings $1100=$13,300)