The following data were taken from the accounting records of Li Company at December 31, Year 1. All adjustments have been recorded. The closing entries have not been recorded.
Required:a) List the accounts that should be closed at the end of Year 1.b) Prepare an income statement for Li Company for Year 1.c) Determine the balance in retained earnings after closing entries have been recorded.
What will be an ideal response?
a) The accounts that should be closed are:
• Service revenue
• Salaries expense
• Operating expense
• Supplies expense
• Insurance expense
• Rent expense
• Dividends
b)
c) 
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