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BAT4m Unit 1: Chapter 4 Unit 1 test will occur on Monday, September 29.

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Presentation on theme: "BAT4m Unit 1: Chapter 4 Unit 1 test will occur on Monday, September 29."— Presentation transcript:

1 BAT4m Unit 1: Chapter 4 Unit 1 test will occur on Monday, September 29

2  After all closing entries have been journalized and posted, another trial balance is prepared from the ledger.  This is called a post closing trial balance.  It is a list of only permanent accounts and their balances after closing entries have been posted.  The purpose is to prove the equality of the permanent account balances. Post-Closing Trial Balance

3  Show Page 170 Illustration 4-4  It provides evidence that the closing entry process is completed and the fundamental accounting equation is in balance.  What happens if transaction is not journalized and posted?  It does not prove that there is no error. Post-Closing Trial Balance

4  Some accountants use worksheets (by hand) to prepare adjusting entries.  Many accountants use accounting software to make worksheets.  Worksheet is a working tool for accountant. (= it is not a permanent record) Worksheets

5  Sometimes errors happen in the recording process.  Correcting entries are made whenever an error is discovered.  Adjusting entries are made only at the end of the fiscal period. They affect one balance sheet account and one income statement account.  In contrast, correcting entries can involve any combination of accounts. Correcting Entries

6  What is the common thing for CE and AE?  They must be journalized and posted.  On May 10, $50 cash collection on account from a customer is journalized and posted at a debit to Cash to $50 and as a credit ot Service Revenue $50. The error is discovered on May 20 when the customer pays the remaining balance in full. Correcting Entries

7 Incorrect entry on May 10: Cash$50 Service Revenue$50 To record collection from customer What should be a correcting entry? May 20 Service Revenue$50 AR$50 Correcting Entries

8 Case #2: On May 18, office equipment which costs $450 is purchased on account. The transaction is journalized and posted as a debit on Delievery Equipment$45 and as a credit to AP$45. The error is discovered on June 3 when the monthly statement for May is received from the creditor.  Incorrect Entry on May 8 Delievery Equipment$45 AP$45 Correcting Entries

9 Case #2:  Incorrect Entry on May 8 Delievery Equipment$45 AP$45 Correcting entry on May June 3 June 3 Office Equipment$450 Delievery Equipment$45 Accounts Payable$405 To correct May 18 entry Correcting Entries

10  Some accountants prefer to reverse certain adjusting entries at the beginning of new accounting period.  A reversing entry is made at the beginning of the next accounting period.  It is the exact opposite of the adjusting entry Reversing Entries

11 Hand out the Surprise Quiz Read P175-P180 (Classified Balance Sheet) Classwork P197 E4-4, E4-5 P202 P4-4 Class work / Homework


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