© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CLOSING ENTRIES AND THE POST-CLOSING TRIAL BALANCE Chapter 5

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Step 1. _____________________________ Step 2. _____________________________ Step 3. _____________________________ Step 4. _____________________________ Step 5. _____________________________ Step 6. _____________________________ Step 7. _____________________________ Step 8. _____________________________ Step 9. _____________________________ Steps in the Accounting Cycle

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The purpose of _________________ is to ______(or ______) the ________________ or ______ accounts. Closing entries are made ______ the last ________________ and ______ the ____________________ have been prepared. Closing entries update the ________________ account. Purpose of Closing Entries

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Purpose of Closing Entries

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 1

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The procedure for closing is simply to balance off the account; in other words, to make the balance ______________. An account to be closed has a debit balance of $870. To make the balance equal to zero, we _____ the account for $870. Procedure for Closing

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The procedure for closing is simply to balance off the account; in other words, to make the balance ______________. An account to be closed has a credit balance of $1,400. To make the balance equal to zero, we ______the account for $1,400. Procedure for Closing

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Step 1. _____________________________________ Step 2. _____________________________________ Step 3. _____________________________________ _____________________________________ Step 4. _____________________________________ Steps in the Closing Procedure

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Closing the Accounts for Conner’s Whitewater Adventure

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In case there is a ___________, Income Summary and Capital are both _________. Assume J. Doe Company experienced a $600 ___________.

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With accounting software, each time the financials statements are prepared, the capital account is updated. If accounting software is being used, perform the following steps: 1.____________________________. 2.____________________________. 3.___________________________________________ ________________. Computerized Accounting

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. You can gather information for the closing entries either directly from the _________ accounts or from the ______________. You may plan the closing entries by balancing off all the figures that appear in the _________________________columns. In the Item column of the ledger account, we write the word “_____________”. Closing Entries Taken Directly from the Work Sheet

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Accountants call the accounts that are to be closed (such as ___________, ___________, ___________, and ___________ ) ___________ (_______________) accounts. Accountants call the accounts that remain ______ from one fiscal period to the next ___________ (___________ ) accounts. Posting the Closing Entries

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 2

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Learning Objective

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. To verify the balances of the accounts that remain _______, a ____________________________ is prepared using the final balance figures from the _______accounts. Note that the accounts listed in the post-closing trial balance are the _______ or _______ accounts. The Post-Closing Trial Balance

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. If the totals of the post-closing trial balance are not equal, here’s the recommended procedures for tracking down the error. 1._________________________________________. 2.________________________________________________________ ____________________________________. 3.________________________________________________________ ____________________________________. 4.________________________________________________________ ________________________________________________________ ____________________________________. Tracking Down an Error

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 3

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Under the ______________________, _________ is _________ when it is _________ ___ ___, and generally _________ are recorded when they are ___ ___ ___. Under the ______________________, _________ is _________ when it is _________, and _________ are recorded when they are _________. Cash and Accrual Accounting

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Cash versus Accrual Roby Hair Salon pays $6,000 cash in July for the current month (July) and the following five months of rent (August-December). Recording rent expense under cash basis and accrual basis.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 4

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Financial statements prepared during the fiscal year, for periods of _____ than _____ _____, are called ________________________. A business may prepare the financial statements monthly to provide up-to-date information about the results of operations. Interim Statements

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Practice Exercise 5

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