Closing the Accounting Cycle LESSON 8-1 4/21/2017 Closing the Accounting Cycle GREEN

Closing the Accounting Cycle LESSON 8-1 4/21/2017 Closing the Accounting Cycle Please note that all slides are available on the class website. GREEN

THE ACCOUNTING CYCLE 1 2 8 3 7 4 6 5 1. Analyzes transactions page 217 1. Analyzes transactions 1 2. Journalize 2 3. Post 8 4. Prepare work sheet 5. Prepare financial statements 3 6. Journalize adjusting and closing entries 7 4 7. Post adjusting and closing entries 8. Prepare post-closing trial balance 6 5 LESSON 8-3

LESSON 8-2 Recording Adjusting Entries 4/21/2017 Recording Adjusting Entries GREEN

ADJUSTING ENTRY PROCEDURES page 202 1. Write the heading. 2. Write the date. 3. Write the title of the account debited. Record the debit amount. 4. Write the title of the account credited. Record the credit amount. LESSON 8-1

LESSON 8-2 Recording Closing Entries 4/21/2017 Recording Closing Entries GREEN

TERMS all on page 206 of your text book permanent accounts temporary accounts closing entries LESSON 8-2

TERMS all on page 206 of your text book Permanent Accounts – Accounts used to accumulate information form one fiscal period to the next. Examples of permanent accounts include asset and liability accounts (balance sheet accounts), as well as the owner’s capital account. Temporary Accounts – Accounts used to accumulate information until it is transferred to the owner’s capital account. Examples of temporary accounts are revenue and expense accounts (income statement accounts), the owner’s drawing account, and the income summary account. LESSON 8-2

TERMS all on page 206 of your text book Closing Entries – Journal entries used to prepare temporary accounts for a new fiscal period. The temporary account balances must be reduced to ZERO at the end of each fiscal period. LESSON 8-2

NEED FOR THE INCOME SUMMARY ACCOUNT page 207 LESSON 8-2

CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE page 208 (Debit to close) 1. Write the heading. 2. Write the date. 3. Write the title of the account debited. Record the debit amount. 4. Write the title of the account credited. Record the credit amount. LESSON 8-2

CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 209 (Credit to close) 1. Date 2. Income Summary 3. Credit 4. Debit amount LESSON 8-2

CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT page 210 1. Date 2. Debit (Income Summary: debit to close) (Capital: credit to record net income) 3. Credit LESSON 8-2

CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT LESSON 8-2 4/21/2017 CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT page 211 1. Date (Credit to close) 2. Debit 3. Credit LESSON 8-2 GREEN

LESSON 8-3 Preparing a Post-Closing Trial Balance 4/21/2017 Preparing a Post-Closing Trial Balance GREEN

GENERAL LEDGER ACCOUNTS AFTER ADJUSTING AND CLOSING ENTRIES ARE POSTED LESSON 8-3 4/21/2017 GENERAL LEDGER ACCOUNTS AFTER ADJUSTING AND CLOSING ENTRIES ARE POSTED page 213 LESSON 8-3 GREEN

POST-CLOSING TRIAL BALANCE page 216 1. Heading 2. Account titles 3. Account balances 4. Single rule 5. Compare totals 6. Totals 7. Record totals 8. Double rule LESSON 8-3