CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 22-4 Adjusting, Closing, and Reversing Entries for a Corporation

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 22-4 ADJUSTING ENTRIES page 654

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 22-4 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES 1 2 page Enter the balance of accounts in the Income Statement credit column as a debit. 2.Enter the total of the debit entries as a credit to Income Summary.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 22-4 CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES page Enter the total of the credit entries as a debit to Income Summary. 2.Enter the balance of every account in the Income Statement debit column as a credit. 1.Enter the account title Income Summary.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 22-4 CLOSING ENTRY TO RECORD NET INCOME 1 2 page Credit Retained Earnings. 1.Debit Income Summary.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 22-4 CLOSING ENTRY FOR DIVIDENDS 1 2 page Credit Dividends. 1.Debit Retained Earnings.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 22-4 REVERSING ENTRIES 2 3 page Reverse the entry that created a balance in Federal Income Tax Payable. 2.Reverse the entry that created a balance in Interest Payable. 1.Reverse the entry that created a balance in Interest Receivable.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 22-4 (continued on next slide) ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION page Source documents are checked for accuracy, and transactions are analyzed into debit and credit parts. 2.Transactions, from information on source documents, are recorded in journals. 3.Journal entries are posted to the accounts payable, accounts receivable, and general ledgers. 4.Schedules of accounts payable and accounts receivable are prepared from the subsidiary ledgers.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON Reversing entries are journalized and posted to the general ledger. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION page A work sheet, including a trial balance and an adjustment for federal income tax expense, is prepared from the general ledger. 6.Financial statements are prepared from the work sheet. 7.Adjusting and closing entries are journalized from the work sheet and posted to the general ledger. 8.A post-closing trial balance of the general ledger is prepared. (continued from previous slide)