1. ACCOUNTING CYCLE FOR A SERVICE BUSINESS 1 1.Source documents checked for accuracy, and transactions are analyzed. 8 8.A post-closing trial balance is prepared. 2 2.Transactions are recorded in a general journal. 3 3.Journal entries are posted to the general ledger. 4 4.Work sheet is prepared. 5 5.Financial statements are prepared. 6 6.Adjusting and closing entries are journalized. 7 7.Adjusting and closing entries are posted. Lesson 9-3, page 208

2. Lesson 9-1, page 192 ADJUSTING ENTRIES Adjustments are on a work sheet - known as “Adjusting Entries” - must THEN be journalized so they can be posted to the general ledger accounts - recorded on the next (empty) general journal page Where would I go to find how many Supplies I have right now? Where would I go to find how much Cash I have right now? Is the Ledger up-to-date? analyzed and planned

3. ADJUSTING ENTRIES 963 1200

4. ADJUSTING ENTRY FOR SUPPLIES 1 2 3.Record the debit. 1. Write the heading. 4.Record the credit. 2.Write the date. 4 3 Lesson 9-1, page 194 Because there are no source documents (OE) (a)

5. ADJUSTING ENTRY FOR PREPAID INSURANCE 1 2.Record the debit. 3.Record the credit. 1.Write the date. 3 2 Lesson 9-1, page 195 (b)

6. Work Together 9-1 (p196 – wb169 & 171) & On Your Own 9-1 (p196 – wb170 & 172) Work Together 9-1 (p196 – wb169 & 171) & On Your Own 9-1 (p196 – wb170 & 172)

7. 963 1200 WT

8. PERMANENT ACCOUNTS - ALO Lesson 9-2, page 197 - used to accumulate information from one fiscal period to the next Assets: Do you have more or less money in the bank just because it is the end of the year? Liabilities: Do you owe people more or less money just because it is the end of the year? Owner’s Equity Accounts: Do you have more or less of an investment in the company just because it is the end of the year? So they are PERMANENT…unchanging

9. TEMPORARY ACCOUNTS – REDI (get them ready – get it?) Lesson 9-2, page 197 - used to accumulate information until it is transferred to the owner’s capital account - shows changes in owner’s equity for a single fiscal period - begin each new fiscal period with a balance of zero Revenue Expenses Drawing Income Summary Made: $25,750.00 in 2004 $56,520.00 in 2005 $42,975.00 in 2006 aka nominal accounts (MEWR) Made: $125,245 in the past 3 years Average of $41,748.33

10. So what is Income Summary, anyway? ~~ when a temporary account is closed, the closing entry must have equal debits & credits entry must have equal debits & credits ~~ Income Summary (temporary account) is used to summarize revenue and expense accounts summarize revenue and expense accounts Income Summary Credit Total Revenues Greater Credit Balance = Net Income Debit Total Expenses Greater Debit Balance = Net Loss There is no “normal balance” – it is what it is

11. 4 CLOSING ENTRIES Lesson 9-2, page 198 1-Close income statement accounts with credit balances S ales 2-Close income statement accounts with debit balances E xpenses 3-Record net income or net loss in the owner’s capital account and close income summary (at the same time) I ncome 4-Close the owner’s drawing account D rawing Each fiscal period, a temporary account DIES

12. GENERAL LEDGER ACCOUNTS AFTER ADJUSTING AND CLOSING ENTRIES ARE POSTED Lesson 9-3, pages 204-205

13. CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE 1 2 3.Record the debit. 1. Write the heading. 4.Record the credit. 2.Write the date (do this at the end of the year – 31 st ). 3 4 (Debit to close) Lesson 9-2, page 199 1 S 4411

14. CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES 2 1 3.Record the credit. 1. Write the date. 4.Record the debit. 2.Income Summary. 4 (Credit to close) 3 Lesson 9-2, page 200 2 E 44113312 Bal. 1099

15. CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT 1 3.Record the credit. 1. Write the date. 2.Record the debit. 3 (Capital: credit to record net income) 2 (Income Summary: debit to close) Lesson 9-2, page 201 3 I 44113312 Bal. 1099

16. CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT 1 3.Record the credit. 1. Write the date. 2.Record the debit. 3 2 (Capital: credit to close) Lesson 9-2, page 202 4 D

17. Work Together 9-2 (p203 – wb169 & 171) & On Your Own 9-2 (p203 – wb170 & 172) Work Together 9-2 (p203 – wb169 & 171) & On Your Own 9-2 (p203 – wb170 & 172)

18. WT SEIDSEID

19. WT Sales Expenses Income

20. GENERAL LEDGER ACCOUNTS AFTER ADJUSTING AND CLOSING ENTRIES ARE POSTED Lesson 9-3, pages 204-205 Sales Expenses Income

21. POST-CLOSING TRIAL BALANCE ~~prepared to make sure debits equal credits 1 8 2 1. Write the heading. 2.Write titles of all general ledger accounts with balances in the Account Title column. 5.Compare the two column totals. 3.Write each account’s balance. 8.Rule double lines. 7.Write the column totals. 6.Write Totals. 4.Rule a single line. 6 4 5 Lesson 9-3, page 207 3 7

22. ACCOUNTING CYCLE FOR A SERVICE BUSINESS 1 1.Source documents checked for accuracy, and transactions are analyzed. 8 8.A post-closing trial balance is prepared. 2 2.Transactions are recorded in a general journal. 3 3.Journal entries are posted to the general ledger. 4 4.Work sheet is prepared. 5 5.Financial statements are prepared. 6 6.Adjusting and closing entries are journalized. 7 7.Adjusting and closing entries are posted. Lesson 9-3, page 208

23. Work Together 9-3 (p209 – wb173-175,179) & On Your Own 9-3 (p209 – wb176-178,180) Work Together 9-3 (p209 – wb173-175,179) & On Your Own 9-3 (p209 – wb176-178,180)

24. WT