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.

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