1. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 16-1 Recording Adjusting Entries

2. CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 16-1 ADJUSTING ENTRIES RECORDED FROM A WORK SHEET page 481 Start a new page in the General Journal. Label it “Adjusting Entries” Record each adjusting entry pair from the worksheet. Stop Here…Closing Entries

3. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 16-2 Recording Closing Entries for Income Statement Accounts

4. CENTURY 21 ACCOUNTING © Thomson/South-Western CLOSING ENTRIES Four closing entries are recorded to set the temporary accounts to zero balances in order to prepare them for the next accounting cycle Temporary accounts are listed on the Income Statement of the Worksheet and Dividends

5. CENTURY 21 ACCOUNTING © Thomson/South-Western STEPS FOR CLOSING ENTRIES 1. Close all Income Statement accounts with a credit balance into INCOME SUMMARY. 2. Close all Income Statement accounts with a debit balance into INCOME SUMMARY. 3. Close INCOME SUMMARY into Retained Earnings account. 4. Close Dividends into Retained Earnings.

6. CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 16-2 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES page 488 Record Income Statement accounts with credit balances Record a total CREDIT to Income Summary

7. CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 16-2 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 489 Record Income Statement accounts with debit balances Record a total DEBIT to Income Summary

8. CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 16-2 CLOSING ENTRY TO RECORD NET INCOME page 491 Record net income to the credit column of Retained Earnings (Loss – debit column) Record a DEBIT to income summary to ZERO out account

9. CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 16-2 CLOSING ENTRY FOR DIVIDENDS page 491 Zero the Dividends account by moving its balance to Retained Earnings Record a debit to Retained Earnings Record a credit to Dividends The amount for the Dividend transaction is the Dividend account balance on the Balance Sheet of the Worksheet

10. CENTURY 21 ACCOUNTING © Thomson/South-Western 10 LESSON 16-2 COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNAL page 492