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Chapter 17 – Recording Adjusting & Closing Entries for a Partnership

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1 Chapter 17 – Recording Adjusting & Closing Entries for a Partnership
Accounting I Chapter 17 – Recording Adjusting & Closing Entries for a Partnership

2 ADJUSTING ENTRIES RECORDED IN A JOURNAL
Lesson 17-1 ADJUSTING ENTRIES RECORDED IN A JOURNAL 2 1 4 3 5 6 1. Heading 4. Debit 2. Date 5. Account Credited 3. Account Debited 6. Credit Lesson 17-1, page 422

3 PARTIAL WORK SHEET SHOWING ADJUSTMENTS
Lesson 17-1, page 423

4 ADJUSTING ENTRY FOR MERCHANDISE INVENTORY
AFTER ADJUSTMENT BEFORE ADJUSTMENT Income Summary Adj. (a) 15,840.00 Merchandise Inventory Bal. 270,480.00 Bal. 270,480.00 Adj. (a) 15,840.00 (New Bal. 254,640.00) Lesson 17-1, page 423

5 ADJUSTING ENTRY FOR OFFICE SUPPLIES INVENTORY
AFTER ADJUSTMENT BEFORE ADJUSTMENT Supplies Expense—Office Adj. (b) 4,730.00 Supplies Expense—Office Bal. 6,480.00 Bal. 6,480.00 Adj. (b) 4,730.00 (New Bal. 1,750.00) Lesson 17-1, page 424

6 ADJUSTING ENTRY FOR STORE SUPPLIES INVENTORY
AFTER ADJUSTMENT BEFORE ADJUSTMENT Supplies Expense—Store Adj. (c) 3,910.00 Supplies Expense—Store Bal. 6,944.00 Bal. 6,944.00 Adj. (c) 3,910.00 (New Bal. 3,034.00) Lesson 17-1, page 424

7 ADJUSTING ENTRY FOR PREPAID INSURANCE
AFTER ADJUSTMENT BEFORE ADJUSTMENT Insurance Expense Adj. (d) 3,170.00 Prepaid Insurance Bal. 5,800.00 Bal. 5,800.00 Adj. (d) 3,170.00 (New Bal. 2,630.00) Lesson 17-1, page 424

8 Work Together & On Your Own – Page 425

9 THE INCOME SUMMARY ACCOUNT
Debit Total expenses Credit Revenue (greater than expenses) (Credit balance is the net income.) Lesson 17-2, page 426

10 CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE
3 1 2 4 1. Heading 2. Date 3. Debit to Close 4. Credit Lesson 17-2, page 427

11 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES
1. Date 2. Account Debited 3 3. Credit to Close 4. Debit Total 1 2 4 Lesson 17-2, page 428

12 Lesson 17-1 SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES Income Summary Bal. 189,960.00 Purchases Bal. 6,600.00 Advertising Expense Bal. 3,385.00 Credit Card Fee Expense Bal. 3,170.00 Insurance Expense Bal. 2,584.15 Miscellaneous Expense Bal. 9,105.00 Payroll Taxes Expense Bal. 21,000.00 Rent Expense Bal. 89,400.00 Salary Expense Bal. 4,730.00 Supplies Expense—Office Bal. 3,910.00 Supplies Expense—Store Bal. 3,820.00 Utilities Expense Closing (revenue) 423,120.00 Adj. (mdse. inv.) 15,840.00 Closing (costs and expenses) 337,664.15 (New Bal. 69,615.85) (New Bal. zero) Closing 189,960.00 (New Bal. zero) Closing 21,000.00 (New Bal. zero) Closing 6,600.00 (New Bal. zero) Closing 89,400.00 (New Bal. zero) Closing 3,385.00 (New Bal. zero) Closing 4,730.00 (New Bal. zero) Closing 3,170.00 (New Bal. zero) Closing 3,910.00 (New Bal. zero) Closing 2,584.15 (New Bal. zero) Closing 3,820.00 (New Bal. zero) Closing 9,105.00 Lesson 17-2, page 429

13 Work Together & On Your Own – Page 430

14 Lesson 17-1 CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT 5 3 2 1 4 1. Date 4. Accounts Credited 2. Account Debited 5. Credits to Record Net Income Lesson 17-3, page 431 3. Debit to Close

15 CLOSING ENTRIES FOR THE PARTNERS’ DRAWING ACCOUNTS
1. Date 2. Account Debited 5 3. Debit to Close 4. Account Credited 2 5. Credits to Record Net Income 3 4 1 Lesson 17-3, page 432

16 COMPLETED CLOSING ENTRIES FOR A PARTNERSHIP RECORDED IN A JOURNAL
Lesson 17-3, page 433

17 Work Together & On Your Own – Page 434

18 POST-CLOSING TRIAL BALANCE
1 1. Write the heading. 3 2. List accounts that have balances. 2 3. Write debit balances. 4. Write credit balances. 4 5. Write the word Totals. 6. Total Debit column. 7. Total Credit column. 8. Verify equality of totals. 9. Rule double lines. 6 7 5 8 9 Lesson 17-4, page 437

19 Lesson 17-1 ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZES AS A PARTNERSHIP. 1. Source documents checked for accuracy, and transactions are analyzed. 1 2. Transactions are recorded in a journal. 2 9 3. Journal entries are posted to ledgers. 4. Schedules of accounts payable and accounts receivable are prepared from subsidiary ledgers. 3 8 4 5. Work sheet is prepared. 5 6. Financial statements are prepared. 7 7. Adjusting and closing entries are journalized. 8. Adjusting and closing entries are posted. 6 9. A post-closing trial balance is prepared. Lesson 17-4, page 438

20 Work Together & On Your Own – Page 439


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