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20 February, 05:09

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.

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  1. 20 February, 05:50
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    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)
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