2. © 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

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

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. Step 1. _____________________________ Step 2. _____________________________ Step 3. _____________________________ Step 4. _____________________________ Step 5. _____________________________ Step 6. _____________________________ Step 7. _____________________________ Step 8. _____________________________ Step 9. _____________________________ Steps in the Accounting Cycle

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.

6. 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

7. © 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

8. © 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

9. © 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

10. © 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

11. © 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

12. © 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

13. © 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

14. © 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. 2,832 1,250 460 620 225 625 512 6,524

15. © 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.

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

17. © 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.

18. 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

19. © 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

20. © 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

21. © 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

22. © 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.

24. Learning Objective

25. © 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

26. © 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

27. © 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

28. © 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

29. © 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

30. © 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.

31. © 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

32. © 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

33. © 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

34. © 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.

35. Practice Exercise 5

36. © 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.