CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8-2 Recording Closing Entries

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 8-2 NEED FOR THE INCOME SUMMARY ACCOUNT page 207

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 8-2 (Debit to close) CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE page 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.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 8-2 (Credit to close) CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page Debit amount 3.Credit 2.Income Summary 1.Date 3

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 8-2 (Income Summary: debit to close) (Capital: credit to record net income) CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT page Credit 2.Debit 1.Date 1 2 3

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 8-2 (Credit to close) CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT page Credit 2.Debit 1.Date 1 2 3

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 8-2 TERMS REVIEW permanent accounts – accounts used to accumulate information from one fiscal period to the next They DO NOT close; Balance Sheet Accounts temporary accounts – accounts used to accumulate information until it is transferred to the owner’s capital account They ALL close; ALL income statement accounts + drawing closing entries – journal entries used to prepare temporary accounts for a new fiscal period page 212