Chapter 17 – Recording Adjusting & Closing Entries for a Partnership Accounting I Chapter 17 – Recording Adjusting & Closing Entries for a Partnership

ADJUSTING ENTRIES RECORDED IN A JOURNAL Lesson 17-1 ADJUSTING ENTRIES RECORDED IN A JOURNAL 2 1 4 3 5 6 1. Heading 4. Debit 2. Date 5. Account Credited 3. Account Debited 6. Credit Lesson 17-1, page 422

PARTIAL WORK SHEET SHOWING ADJUSTMENTS Lesson 17-1, page 423

ADJUSTING ENTRY FOR MERCHANDISE INVENTORY AFTER ADJUSTMENT BEFORE ADJUSTMENT Income Summary Adj. (a) 15,840.00 Merchandise Inventory Bal. 270,480.00 Bal. 270,480.00 Adj. (a) 15,840.00 (New Bal. 254,640.00) Lesson 17-1, page 423

ADJUSTING ENTRY FOR OFFICE SUPPLIES INVENTORY AFTER ADJUSTMENT BEFORE ADJUSTMENT Supplies Expense—Office Adj. (b) 4,730.00 Supplies Expense—Office Bal. 6,480.00 Bal. 6,480.00 Adj. (b) 4,730.00 (New Bal. 1,750.00) Lesson 17-1, page 424

ADJUSTING ENTRY FOR STORE SUPPLIES INVENTORY AFTER ADJUSTMENT BEFORE ADJUSTMENT Supplies Expense—Store Adj. (c) 3,910.00 Supplies Expense—Store Bal. 6,944.00 Bal. 6,944.00 Adj. (c) 3,910.00 (New Bal. 3,034.00) Lesson 17-1, page 424

ADJUSTING ENTRY FOR PREPAID INSURANCE AFTER ADJUSTMENT BEFORE ADJUSTMENT Insurance Expense Adj. (d) 3,170.00 Prepaid Insurance Bal. 5,800.00 Bal. 5,800.00 Adj. (d) 3,170.00 (New Bal. 2,630.00) Lesson 17-1, page 424

Work Together & On Your Own – Page 425

THE INCOME SUMMARY ACCOUNT Debit Total expenses Credit Revenue (greater than expenses) (Credit balance is the net income.) Lesson 17-2, page 426

CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE 3 1 2 4 1. Heading 2. Date 3. Debit to Close 4. Credit Lesson 17-2, page 427

CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES 1. Date 2. Account Debited 3 3. Credit to Close 4. Debit Total 1 2 4 Lesson 17-2, page 428

Lesson 17-1 SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES Income Summary Bal. 189,960.00 Purchases Bal. 6,600.00 Advertising Expense Bal. 3,385.00 Credit Card Fee Expense Bal. 3,170.00 Insurance Expense Bal. 2,584.15 Miscellaneous Expense Bal. 9,105.00 Payroll Taxes Expense Bal. 21,000.00 Rent Expense Bal. 89,400.00 Salary Expense Bal. 4,730.00 Supplies Expense—Office Bal. 3,910.00 Supplies Expense—Store Bal. 3,820.00 Utilities Expense Closing (revenue) 423,120.00 Adj. (mdse. inv.) 15,840.00 Closing (costs and expenses) 337,664.15 (New Bal. 69,615.85) (New Bal. zero) Closing 189,960.00 (New Bal. zero) Closing 21,000.00 (New Bal. zero) Closing 6,600.00 (New Bal. zero) Closing 89,400.00 (New Bal. zero) Closing 3,385.00 (New Bal. zero) Closing 4,730.00 (New Bal. zero) Closing 3,170.00 (New Bal. zero) Closing 3,910.00 (New Bal. zero) Closing 2,584.15 (New Bal. zero) Closing 3,820.00 (New Bal. zero) Closing 9,105.00 Lesson 17-2, page 429

Work Together & On Your Own – Page 430

Lesson 17-1 CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT 5 3 2 1 4 1. Date 4. Accounts Credited 2. Account Debited 5. Credits to Record Net Income Lesson 17-3, page 431 3. Debit to Close

CLOSING ENTRIES FOR THE PARTNERS’ DRAWING ACCOUNTS 1. Date 2. Account Debited 5 3. Debit to Close 4. Account Credited 2 5. Credits to Record Net Income 3 4 1 Lesson 17-3, page 432

COMPLETED CLOSING ENTRIES FOR A PARTNERSHIP RECORDED IN A JOURNAL Lesson 17-3, page 433

Work Together & On Your Own – Page 434

POST-CLOSING TRIAL BALANCE 1 1. Write the heading. 3 2. List accounts that have balances. 2 3. Write debit balances. 4. Write credit balances. 4 5. Write the word Totals. 6. Total Debit column. 7. Total Credit column. 8. Verify equality of totals. 9. Rule double lines. 6 7 5 8 9 Lesson 17-4, page 437

Lesson 17-1 ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZES AS A PARTNERSHIP. 1. Source documents checked for accuracy, and transactions are analyzed. 1 2. Transactions are recorded in a journal. 2 9 3. Journal entries are posted to ledgers. 4. Schedules of accounts payable and accounts receivable are prepared from subsidiary ledgers. 3 8 4 5. Work sheet is prepared. 5 6. Financial statements are prepared. 7 7. Adjusting and closing entries are journalized. 8. Adjusting and closing entries are posted. 6 9. A post-closing trial balance is prepared. Lesson 17-4, page 438

Work Together & On Your Own – Page 439