It is December 31 and time for your business to close the books. The following balances appear on the books of Sarah Simon Enterprises:

a. Dividends, $8,500.

b. Service revenue, $23,700.

c. Expense account balances: Salary, $6,100; Rent, $4,000; Advertising, $3,300.

Requirements

1. Set up each T-account given and insert its adjusted balance as given (denote as Bal) at December 31. Also set up a T-account for Retained earnings, $26,100, and for Income summary.

2. Post the closing entries to the accounts, denoting posted amounts as Clo.

3. Compute the ending balance of Retained earnings.