1. Layout of the Accounting Work Sheet Unadjusted Adjustments Adjusted Income Balance Account Title Trial Balance Trial Balance Statement Sheet Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr

2. Adjusted Trial Balance Asset Accounts Liability Accounts Equity Accounts Revenue Accounts Expense Accounts Income Statement Revenues -Expenses =Net Income Statement of Changes In Owner’s Equity Beginning Capital +Net Income + Add’l Investments -Net Loss -Withdrawals =Ending Capital Balance Sheet Assets =Liabilities +Equities

3. Close Temporary Accounts: (1) Close the Revenue Account(s) to “Income Summary” (a clearing account) (2) Close the Expense Accounts to “Income Summary” (3) Close “Income Summary” to “Capital” (4) Close “Drawing” to “Capital”

4. Wages Expense Bal.4,525 Rent Expense Bal.1,600 Depreciation Expense Bal.50 Utilities Expense Bal.985 Supplies Expense Bal.2,040 Insurance Expense Bal.100 Miscellaneous Expense Bal.455 Fees Earned Bal.16,840 Rent Revenue Bal.120 Pat King, Capital Bal.15,000 Pat King, Drawing Bal.4,000 Income Summary Note: Note: The balances shown are adjusted balances before closing. The following sequence demonstrates the closing process. The Closing Process

5. Wages Expense Bal.4,525 Rent Expense Bal.1,600 Depreciation Expense Bal.50 Utilities Expense Bal.985 Supplies Expense Bal.2,040 Insurance Expense Bal.100 Miscellaneous Expense Bal.455 Fees Earned Bal.16,840 Rent Revenue Bal.120 16,840 120 120 Income Summary 16,960 16,960 Pat King, Capital Close Revenues Close Revenues Bal.15,000 Pat King, Drawing Bal.4,000 Total Revenues The Closing Process

6. Wages Expense Bal.4,525 Rent Expense Bal.1,600 Depreciation Expense Bal.50 Utilities Expense Bal.985 Supplies Expense Bal.2,040 Insurance Expense Bal.100 Miscellaneous Expense Bal.455 4,5251,600 50 985 2,040 100 455 Fees Earned Bal.16,840 Rent Revenue Bal.120 16,840 120 120 Income Summary 16,960 16,9609,755 Pat King, Capital Close Revenues Close Revenues Bal.15,000 Pat King, Drawing Bal.4,000 Close Expenses Close Expenses Total Expenses Total Revenues The Closing Process

7. Wages Expense Bal.4,525 Rent Expense Bal.1,600 Depreciation Expense Bal.50 Utilities Expense Bal.985 Supplies Expense Bal.2,040 Insurance Expense Bal.100 Miscellaneous Expense Bal.455 4,5251,600 50 985 2,040 100 455 Fees Earned Bal.16,840 Rent Income Bal.120 16,840 120 120 Income Summary 16,960 16,9609,755 Pat King, Capital Close Revenues Close Revenues Bal.15,000 Pat King, Drawing Bal.4,000 Close Expenses Close Expenses The Closing Process 7,205 7,205 7,205 Close Income Summary Net Income Closed

8. Wages Expense Bal.4,525 Rent Expense Bal.1,600 Depreciation Expense Bal.50 Utilities Expense Bal.985 Supplies Expense Bal.2,040 Insurance Expense Bal.100 Miscellaneous Expense Bal.455 4,5251,600 50 985 2,040 100 455 Fees Earned Bal.16,840 Rent Income Bal.120 16,840 120 120 Income Summary 16,960 16,9609,755 Pat King, Capital Close Revenues Close Revenues Bal.15,000 Pat King, Drawing Bal.4,000 Close Expenses Close Expenses The Closing Process 7,205 7,205 7,205 Close Income Summary Close Income Summary Net Income 4,000 4,000 Close Drawing Close Drawing Drawing Closed

9. Wages Expense Rent Expense Depreciation Expense Utilities Expense Supplies Expense Insurance Expense Miscellaneous Expense Fees Earned Rent Income Income Summary Pat King, Capital Bal.15,000 Pat King, Drawing Net Income Net Income Drawing Drawing Bal.18,205 All temporary accounts now have zero balances and are ready for the next accounting period. 7,205 7,205 4,000 The Closing Process