1. ACCOUNTING CYCLE FOR A SERVICE BUSINESS
1. Analyzes transactions 1
2. Journalize 2
3. Post 8
4. Prepare work sheet
5. Prepare financial statements 3
6. Journalize adjusting and closing entries 7 4
7. Post adjusting and closing entries
8. Prepare post-closing trial balance 6 5
LESSON 8-3

2. ADJUSTING ENTRY FOR SUPPLIES
LESSON 8-1

3. ADJUSTING ENTRY FOR PREPAID INSURANCE
LESSON 8-1

4. Closing entries TEMPORARY PERMANENT
SALES + EXPENSES INCOME SUMMARY CAPITAL ACCOUNT (OE)
TEMPORARY
PERMANENT

5. Closing entries TERMS REVIEW
Permanent Accounts also known as Real Accounts - Assets, Liabilities and OE accounts
Temporary Accounts – used to accumulate information until it is transferred to OE accounts (e.g. Sales & Expenses)
Closing Entries – used to reduce temporary accounts back to 0. WHY??
LESSON 8-2

6. WORK sHEET

7. NEED FOR THE INCOME SUMMARY ACCOUNT
LESSON 8-2

8. CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE
(Debit to close)
LESSON 8-2

9. CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES
(Credit to close)
LESSON 8-2

10. CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT
page 210
(Income Summary: debit to close)
(Capital: credit to record net income)
LESSON 8-2

11. CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT
LESSON 8-2
4/17/2017
CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT
page 211
(Credit to close)
LESSON 8-2
GREEN

12. Application problem 8-2
Get a textbook.
Go to schoolrack.com/dgarfinkel. Click on “Accounting”
Scroll down to “Chapter 8” and click on “Activity: Excel Application Problem 8-2”
Open the file up and turn to p. 221 in the text