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Q 21QS

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Financial & Managerial Accounting
Found in: Page 143
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

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; and Rent Expense, $1,600.

Prepare the necessary closing entries from the available information at December 31.

Answer:

Journal entries in the books of Mai company are shown in step 2.

See the step by step solution

Step by Step Solution

Step-by-Step Solution

Step 1: Definition of wage expense

The expenses that occurred during the payment of wages is known as wage expense.

Step 2: Necessary closing entries

Journal entry

Date

Particulars

Debit

Credit

December 31

Income Summary

$10,000

Rent Expense

$1,600

Wage Expense

$8,400

(Being closing entry of rent and wages)

December 31

Service Revenue

$13,000

Income Summary

$13,000

(Closing entry of service revenue)

December 31

Income Summary Retain Earning

$3,000

Income summary

$3,000

(Entry of profit)

December 31

Retained Earnings

$800

Dividend

$800

(Closing entry of dividend)

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