Recording adjusting and closing entries for a corporation Chapter 16 Recording adjusting and closing entries for a corporation

14. Recording adjusting entries Completing a work sheet does not change ledger balances, posting journal entries is necessary Adjusting entries come from the adjustment columns on the work sheet

ADJUSTING ENTRIES RECORDED FROM A WORK SHEET page 480 1. Heading 2. Date 3 3. Identify the first adjustment 4. Account debited 5. Debit 6. Account credited 7. Credit 8. Continue down the Adjustments columns 2 1 4 6 5 7 LESSON 16-1

ADJUSTING ENTRY FOR ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS page 482 LESSON 16-1

ADJUSTING ENTRY FOR MERCHANDISE INVENTORY page 482 LESSON 16-1

ADJUSTING ENTRY FOR SUPPLIES—OFFICE page 483 LESSON 16-1

ADJUSTING ENTRY FOR SUPPLIES—STORE page 483 LESSON 16-1

ADJUSTING ENTRY FOR PREPAID INSURANCE page 484 LESSON 16-1

ADJUSTING ENTRY FOR DEPRECIATION—OFFICE EQUIPMENT page 484 LESSON 16-1

ADJUSTING ENTRY FOR DEPRECIATION—STORE EQUIPMENT page 485 LESSON 16-1

ADJUSTING ENTRY FOR FEDERAL INCOME TAXES page 485 LESSON 16-1

15. Recording closing entries Revisiting accounting concepts: Matching Expenses with Revenue – closing entries prepare temporary accounts for the next fiscal period Closing entries come from the income statement and balance sheet columns of the work sheet Temporary accounts: Sales Expenses Sales discount Income Summary Sales returns and allowances Dividends Purchases Purchases discount Purchases returns and allowances

THE INCOME SUMMARY ACCOUNT page 487 Debit balance = net loss Credit balance = net income Income summary = NO normal balance LESSON 16-2

CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES page 488 3 1 2 4 1. Heading 3. Debits to close 2. Date 4. Credit to Income Summary LESSON 16-2

CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 489 1. Date 2. Account debited 3 3. Credits to close 4. Debit amount 1 2 4 LESSON 16-2

SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 490 Bal. 209,960.00 Closing 209,960.00 (New Bal. zero) Purchases Adj. (mdse. inv.) 15,840.00 Closing (credit amounts) 500,253.10 Closing (debit accounts) 404,099.15 (New Bal. 80,313.95) Income Summary LESSON 16-2

CLOSING ENTRY TO RECORD NET INCOME page 491 1 2 3 1. Date 2. Debit Income Summary 3. Credit Retained Earnings LESSON 16-2

CLOSING ENTRY FOR DIVIDENDS page 491 1 2 3 1. Date 2. Debit Retained Earnings 3. Credit Dividends LESSON 16-2

COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNAL page 492 LESSON 16-2

16. Prepare a post-closing trial balance List all permanent accounts with a balance

POST-CLOSING TRIAL BALANCE LESSON 16-3 POST-CLOSING TRIAL BALANCE 4/26/2017 page 496 1. Heading 1 2. Accounts that have balances 3 2 3. Balances of asset accounts 4 4. Balances contra asset, liability, and capital accounts 5. Word Totals 6. Totals 7. Double lines 5 6 7 LESSON 16-3 Blue

ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION page 497 1. Source documents are checked, and transactions are analyzed. 1 2 2. Transactions are recorded in journals. 3. Journal entries are posted to the accounts payable ledger, the accounts receivable ledger, and the general ledger. 3 4 5 4. Schedules of accounts payable and account receivable are prepared from the subsidiary ledgers. 5. A work sheet is prepared from the general ledger. (continued on next slide) LESSON 16-3

ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION page 497 6. Financial statements are prepared. 7. Adjusting and closing entries are journalized from the work sheet. 9 8. Adjusting and closing entries are posted to the general ledger. 9. A post-closing trial balance of the general ledger is prepared. 8 7 6 (continued from previous slide) LESSON 16-3