CLOSING ENTRIES FOR THREE ORGANIZATIONS. Each of the following companies makes closing entries annually at December 31:

a) Company A is a sole proprietorship owned by Grabner and is financed in part by a $40,000 note payable to Kim, a personal friend. The company has preclosing balances at the end of 19x8 as follows: drawings, $15,000 debit; equity, $85,000 credit;

income summary, $24,000 credit.

b) Company B is a partnership formed by Blain and Patton. The company has preclosing balances at the end of 19x8 as follows: drawings of Blain, $15,000 debit;

drawings of Patton, $5,000 debit; equity of Blain, $85,000 credit; equity of Patton,

$40,000 credit; income summary, $29,000 credit. Net income is distributed equally between the partners.

c) Company C is a corporation, with Bused and Cold as the only stockholders. The company has preclosing balances at the end of 19x8 as follows: dividends, $12,000 debit; income summary, $16,700 credit; common stock (par), $80,000 credit; paidin capital in excess of par, $32,000 credit; retained earnings, $18,000 credit.

REQUIRED:

1. Prepare closing entries at December 31, 19x8, for the three companies.

2. Prepare the equity section of each company’s balance sheet at December 31, 19x8.