Download presentation
Presentation is loading. Please wait.
Published byRoxanne Simon Modified over 8 years ago
1
CLOSING ENTRIES Chapter 9
2
Close Sales INCOME SUMMARY Sales JOURNAL ENTRY Nov. 20Salesxxx Income Summaryxxx Normal Balance Decrease OEIncrease OE
3
Close Expenses INCOME SUMMARY Expense Account JOURNAL ENTRY Nov. 20Income Summaryxxx Expense Accountxxx Credit balance exists because we just CREDITED it from SALES closing Normal Balance Expense Account Normal Balance What results in income summary is either a net income (if credit balance/sales were higher) or net loss (if debit balance/expenses were higher)
4
TIP What might help you is to now POST. See what balance you have in Income Summary. Is it a DR or a CR? To close it, do the OPPOSITE to bring it down to ZERO.
5
Close Income Summary JOURNAL ENTRY Nov. 20Income Summaryxxx Owner’s Capitalxxx Owner, Capital Normal Balance INCOME SUMMARY IF NET INCOME Credit balance (More Sales Than Expenses) Increase an OEDecrease an OE We’re adding The PROFIT Back into Our capital!
6
Close Income Summary JOURNAL ENTRY Nov. 20Owner, Capitalxxx Income Summaryxxx Owner, Capital Normal Balance INCOME SUMMARY IF NET LOSS Debit balance (More Expenses Than Sales) Decrease an OEIncrease an OE We’re taking the LOSS out of our capital!
7
Close Drawing JOURNAL ENTRY Nov. 20Capitalxxx Drawingxxx Owner, Capital Normal Balance Owner, Drawing Debit balance Decrease an OEDecrease in Contra OE (inc in OE) We’re taking the DRAWING out of our capital!
8
After closing entries… Sales account = $0 balance Expenses = $0 balance each Income Summary = $0 balance Drawing = $0 balance CAPITAL WILL BE ADJUSTED Increased by Net Income OR Decreased by Net Loss Decreased by Drawing
Similar presentations
© 2024 SlidePlayer.com Inc.
All rights reserved.