Problem 3: The following selected accounts are taken from the general ledger of the Little Milton Company.

Accumulated Depreciation $10,000

Depreciation Expense 7,000

Retained Earnings 20,000

Salaries and Wages Expense 18,000

Service Revenue 31,000

Dividends of $12,000 were paid during the year and are not reflected in the balance of retained earnings above.

Required:

1. Prepare the journal entry to record the dividends paid durning the year.
2. Prepare the closing entries for the year.