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Published byPhebe Wiggins Modified over 8 years ago
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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 8-1 Journalize Closing Entries Close Temporary Accounts: Revenue Expenses Drawing
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CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 8-2 Accounts Permanent Accounts: business always has Assets, Liabilities, Owner’s Capital (balance sheet accounts) Temporary Accounts: close at the end of each fiscal period Revenue, Expenses, Drawing, Income Summary Will get “dumped” into capital which will update capital
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CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 8-2 NEED FOR THE INCOME SUMMARY ACCOUNT page 207 Income Summary: Temporary Capital Account No Normal Balance Side Used for Adjusting and Closing Entries ONLY
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CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 8-2 (Debit to close) Close the Revenue Accounts page 208
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CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 8-2 (Credit to close) Close the Expense Accounts page 209
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CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 8-2 (Income Summary: debit to close) (Capital: credit to record net income) Close Income Summary Record Net Income/Loss into Capital page 210 For NET LOSS Debit Capital and Credit Income Summary
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CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 8-2 (Credit to close) Close Drawing Account page 211
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CENTURY 21 ACCOUNTING © Thomson/South-Western Closing Entry Review 1 - Close all Revenue Accounts (amount of sales) D – Sales C – Income Summary 2 – Close all Expense Accounts (amount of each expense) D – Income Summary C – Expense (list each expense individually)
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CENTURY 21 ACCOUNTING © Thomson/South-Western Closing Entry Review 3 – Close Income Summary Dump net income into capital D – Income Summary C - Capital Dump net loss into capital D – Capital C – Income Summary
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CENTURY 21 ACCOUNTING © Thomson/South-Western Closing Entry Review 3 – Close Drawing (amount drawing) D – Capital C – Drawing NOTE: THE CAPITAL ACCOUNT WILL NEVER CLOSE!
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