Lesson 26-4 ADJUSTING ENTRIES Lesson 26-4, page 675

CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES 1 2 1. Enter the balance of accounts in the Income Statement credit column as a debit. 2. Enter the total of debit entries as a credit to Income Summary. Lesson 26-4, page 676

CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES 1. Enter Income Summary. 2. Enter the balance of every account in the Income Statement debit column as a credit. 1 3 2 3. Enter the total as a debit to Income Summary. Lesson 26-4, page 677

CLOSING ENTRY TO RECORD NET INCOME 1 2 1. Debit Income Summary 2. Credit Retained Earnings Lesson 26-4, page 678

CLOSING ENTRY FOR DIVIDENDS 1 2 1. Debit Retained Earnings 2. Credit Dividends Lesson 26-4, page 678

REVERSING ENTRIES 1. Reverse the entry that created a balance in Interest Receivable. 1 2. Reverse the entry that created a balance in Interest Payable. 2 3 3. Reverse the entry that created a balance in Federal Income Tax Payable. Lesson 26-4, page 679

ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION 1. Source documents checked for accuracy, and transactions are analyzed. 2. Transactions are recorded in journals. 2 1 3. Journal entries are posted to ledgers. 9 4. Schedules of accounts payable and accounts receivable are prepared from subsidiary ledgers. 3 8 4 5 5. Work sheet is prepared. 6. Financial statements are prepared. 7 7. Adjusting and closing entries are journalized. 8. A post-closing trial balance is prepared. 6 9. Reversing entries are journalized and posted to the general ledger. Lesson 26-4, page 680