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19 October, 11:36

The ledger of Mai Company includes the following accounts with normal balances as of December 31: D. Mai, Capital $10,800; D. Mai, Withdrawals $1,700; Services Revenue $31,000; Wages Expense $17,400; and Rent Expense $5,200. Prepare its December 31 closing entries.

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  1. 19 October, 11:54
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    End of the year closing capital balance will be = $17,500 (CR)

    Explanation:

    Income Statement

    $

    Services Revenue $31,000

    Wages Expenses ($17,400)

    Rent Expenses ($5,200)

    Profit $8400

    In summary, end of the year closing capital balance will be:

    $10,800 (Capital as given) + $ 8400 (Retained Earning) - $1,700 (drawings)

    =$17,500

    Entries include:

    Capital Account (CR) $10,800, Drawings Account (DR) $1,700, Director's Current Account (CR) $1700, Cash or Bank (CR) $1700

    Retained Earning (CR) $ 8400
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