Recording Adjusting and Closing Entries

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Chapter 8

• Recording Adjusting and Closing Entries

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21. Adjusting Entries
Adjusting entries journal entries recorded to
update general ledger accounts at the end of a
fiscal period
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ADJUSTING ENTRY FOR SUPPLIES
page 202
1. Write the heading.
2. Write the date.
3. Write the title of the account debited. Record
the debit amount.
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4. Write the title of the account credited.
Record the credit amount.
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ADJUSTING ENTRY FOR PREPAID INSURANCE
page 204
1. Write the date.
2. Write the title of the account debited. Record
the debit amount.
3. Write the title of the account credited.
Record the credit amount.
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22. Recording Closing Entries
Permanent accounts accounts used to accumulate
information from one fiscal period to the next
(aka Real accounts) Ex Assets, liabilities, and
owners capital Temporary accounts accounts
used to accumulate information until it is
transferred to the owners capital account (aka
Nominal accounts) Ex Revenue, expenses,
drawing, and income summary Closing entries
journal entries used to prepare temporary
accounts for a new fiscal period
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NEED FOR THE INCOME SUMMARY ACCOUNT
page 207
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CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT
WITH A CREDIT BALANCE
page 208
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1. Write the heading.
2. Write the date.
3. Write the title of the account debited. Record
the debit amount.
4. Write the title of the account credited.
Record the credit amount.
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CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH
DEBIT BALANCES
page 209
1. Date
2. Income Summary
3. Credit
4. Debit amount
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CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND
CLOSE THE INCOME SUMMARY ACCOUNT
page 210
1. Date
2. Debit
3. Credit
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CLOSING ENTRY FOR THE OWNERS DRAWING ACCOUNT
page 211
1. Date
2. Debit
3. Credit
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23. Preparing a Post-Closing Trial Balance
Post-closing trial balance a trial balance
prepared after the closing entries are
posted Accounting cycle the series of
accounting activities included in recording
financial information for a fiscal period
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GENERAL LEDGER ACCOUNTS AFTER ADJUSTING AND
CLOSING ENTRIES ARE POSTED
page 213
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POST-CLOSING TRIAL BALANCE
page 216
1. Heading
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2. Account titles
3. Account balances
4. Single rule
5. Compare totals
6. Totals
7. Record totals
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8. Double rule
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ACCOUNTING CYCLE FOR A SERVICE BUSINESS
page 217
1. Analyzes transactions
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2. Journalize
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3. Post
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4. Prepare work sheet
5. Prepare financial statements
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6. Journalize adjusting and closing entries
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7. Post adjusting and closing entries
8. Prepare post-closing trial balance
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