Presentation on theme: "Unit 1 test will occur on Monday, September 29"— Presentation transcript:
1Unit 1 test will occur on Monday, September 29 BAT4m Unit 1: Chapter 4Unit 1 test will occur on Monday, September 29
2Post-Closing Trial Balance 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.
3Post-Closing Trial Balance Show Page 170 Illustration 4-4It 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.
4WorksheetsSome 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)
5Sometimes errors happen in the recording process. Correcting EntriesSometimes 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.Y
6What is the common thing for CE and AE? Correcting EntriesWhat 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.Y
7Correcting EntriesIncorrect entry on May 10: Cash $50 Service Revenue $50 To record collection from customer What should be a correcting entry? May 20 AR $50Y
8Correcting EntriesCase #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 8Delievery Equipment $45AP $45Y
9Correcting Entries Case #2: Incorrect Entry on May 8 Delievery Equipment $45AP $45Correcting entry on May June 3June 3Office Equipment $450Delievery Equipment $45Accounts Payable $405To correct May 18 entryY
10Reversing EntriesSome 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
11Class work / HomeworkHand out the Surprise Quiz Read P175-P180 (Classified Balance Sheet) Classwork P197 E4-4, E4-5 P202 P4-4