1. Recording adjusting and closing entries for a corporation
Chapter 16
Recording adjusting and closing entries for a corporation

2. 14. Recording adjusting entries
Completing a work sheet does not change ledger balances, posting journal entries is necessary
Adjusting entries come from the adjustment columns on the work sheet

3. ADJUSTING ENTRIES RECORDED FROM A WORK SHEET
page 480
1. Heading
2. Date 3
3. Identify the first adjustment
4. Account debited
5. Debit
6. Account credited
7. Credit
8. Continue down the Adjustments columns 2 1 4 6 5 7
LESSON 16-1

4. ADJUSTING ENTRY FOR ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
page 482
LESSON 16-1

5. ADJUSTING ENTRY FOR MERCHANDISE INVENTORY
page 482
LESSON 16-1

6. ADJUSTING ENTRY FOR SUPPLIES—OFFICE
page 483
LESSON 16-1

7. ADJUSTING ENTRY FOR SUPPLIES—STORE
page 483
LESSON 16-1

8. ADJUSTING ENTRY FOR PREPAID INSURANCE
page 484
LESSON 16-1

9. ADJUSTING ENTRY FOR DEPRECIATION—OFFICE EQUIPMENT
page 484
LESSON 16-1

10. ADJUSTING ENTRY FOR DEPRECIATION—STORE EQUIPMENT
page 485
LESSON 16-1

11. ADJUSTING ENTRY FOR FEDERAL INCOME TAXES
page 485
LESSON 16-1

12. 15. Recording closing entries
Revisiting accounting concepts:
Matching Expenses with Revenue – closing entries prepare temporary accounts for the next fiscal period
Closing entries come from the income statement and balance sheet columns of the work sheet
Temporary accounts:
Sales Expenses
Sales discount Income Summary
Sales returns and allowances Dividends
Purchases
Purchases discount
Purchases returns and allowances

13. THE INCOME SUMMARY ACCOUNT
page 487
Debit balance = net loss Credit balance = net income
Income summary = NO normal balance
LESSON 16-2

14. CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES
page 488 3 1 2 4
1. Heading
3. Debits to close
2. Date
4. Credit to Income Summary
LESSON 16-2

15. CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES
page 489
1. Date
2. Account debited 3
3. Credits to close
4. Debit amount 1 2 4
LESSON 16-2

16. SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES
page 490
Bal. 209, Closing 209,960.00
(New Bal. zero)
Purchases
Adj. (mdse. inv.) 15, Closing (credit amounts) 500,253.10
Closing (debit accounts) 404, (New Bal. 80,313.95)
Income Summary
LESSON 16-2

17. CLOSING ENTRY TO RECORD NET INCOME
page 491 1 2 3
1. Date
2. Debit Income Summary
3. Credit Retained Earnings
LESSON 16-2

18. CLOSING ENTRY FOR DIVIDENDS
page 491 1 2 3
1. Date
2. Debit Retained Earnings
3. Credit Dividends
LESSON 16-2

19. COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNAL
page 492
LESSON 16-2

20. 16. Prepare a post-closing trial balance
List all permanent accounts with a balance

21. POST-CLOSING TRIAL BALANCE
LESSON 16-3
POST-CLOSING TRIAL BALANCE
4/26/2017
page 496
1. Heading 1
2. Accounts that have balances 3 2
3. Balances of asset accounts 4
4. Balances contra asset, liability, and capital accounts
5. Word Totals
6. Totals
7. Double lines 5 6 7
LESSON 16-3
Blue

22. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION
page 497
1. Source documents are checked, and transactions are analyzed. 1 2
2. Transactions are recorded in journals.
3. Journal entries are posted to the accounts payable ledger, the accounts receivable ledger, and the general ledger. 3 4 5
4. Schedules of accounts payable and account receivable are prepared from the subsidiary ledgers.
5. A work sheet is prepared from the general ledger.
(continued on next slide)
LESSON 16-3

23. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION
page 497
6. Financial statements are prepared.
7. Adjusting and closing entries are journalized from the work sheet. 9
8. Adjusting and closing entries are posted to the general ledger.
9. A post-closing trial balance of the general ledger is prepared. 8 7 6
(continued from previous slide)
LESSON 16-3