1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 16-2 Recording Closing Entries for Temporary Accounts

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Permanent vs. Temporary Accounts Permanent accounts Accumulate information from one fiscal period to the next. Assets, Liabilities, and Stockholders’ Equity Temporary accounts Accumulate information until transferred to the Retained Earnings Closed at the end of each fiscal period Revenue, cost, expenses, and dividends

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Closing Entries Closing Entries Journalize right below Adjusting Entries Heading “Closing Entries” is written to explain why there are no source document numbers. Information is obtained from the worksheet

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Income Summary Account Used to summarize the closing entries for revenue, cost and expenses. Does not have a normal balance

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 16-2 THE INCOME SUMMARY ACCOUNT page 487

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 16-2 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES 1 2 page 488 3.Debits to close 4 1.Heading 2.Date4.Credit to Income Summary 33

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 16-2 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES 1 24 page 489 3.Credits to close 1.Date 2.Account debited 4.Debit amount 3 3

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 16-2 SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 490 Bal.209,960.00Closing 209,960.00 (New Bal. zero) Purchases Adj. (mdse. inv.)15,840.00Closing (credit amounts)500,253.10 Closing (debit accounts)404,099.15(New Bal.80,313.95) Income Summary

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 16-2 CLOSING ENTRY TO RECORD NET INCOME page 491 1 2 3 3.Credit Retained Earnings 1.Date 2.Debit Income Summary

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 16-2 CLOSING ENTRY FOR DIVIDENDS page 491 3.Credit Dividends 1.Date 2.Debit Retained Earnings 1 2 3

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 16-2 COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNAL page 492