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

Answer:

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)