Download presentation
Presentation is loading. Please wait.
1
Home
2
Closing entries transfer the temporary account balances to the owner’s capital account. After the closing entries are posted, a post-closing trial balance is prepared to verify that debits equal credits. Home Glencoe Accounting Glencoe Accounting Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
3
Completing the Accounting Cycle
Preparing Closing Entries Section 10.1 After the closing entries have been journalized and posted, a trial balance is prepared. closing entries Journal entries made to close, or reduce to zero, the balances in the temporary accounts and to transfer the net income or net loss for the period to the capital account. Home Glencoe Accounting
4
Starting the Eighth Step in the Accounting Cycle: Journalizing the Closing Entries
Preparing Closing Entries Section 10.1 Home Glencoe Accounting
5
The Income Summary Account
Preparing Closing Entries Section 10.1 The Income Summary Account Income Summary account The general ledger account used to summarize the revenue and expenses for the period. Serves as a simple income statement in the general ledger Used to accumulate revenue and expenses for the period Equals the net income or loss for the period Home Glencoe Accounting
6
The Income Summary Account
Preparing Closing Entries Section 10.1 is used only at the end of the accounting period to summarize revenue and expense balances. The Income Summary account is a temporary account that: does not have a normal balance. has a zero balance before and after the closing. does not appear on any financial statement. Home Glencoe Accounting
7
Preparing the Closing Entries
Preparing Closing Entries Section 10.1 Enter Closing Entries in the Description column. To record closing entries in the general journal: Enter the last day of the accounting period. Enter the name(s) and amount(s) of the account(s) to be debited. Enter Income Summary as the name of the account to be credited and the amount to be credited. Home Glencoe Accounting
8
Preparing Closing Entries
Section 10.1 Closing Entry First Closing Entry—Close Revenue to Income Summary See page 257 Home Glencoe Accounting
9
Preparing Closing Entries
Section 10.1 Closing Entry Second Closing Entry—Close Expenses to Income Summary See page 258 Home Glencoe Accounting
10
Preparing Closing Entries
Section 10.1 Closing Entry Second Closing Entry—Close Expenses to Income Summary See pages 258–259 Home Glencoe Accounting
11
Preparing Closing Entries
Section 10.1 Closing Entry Third Closing Entry—Close Income Summary to Capital See page 259–260 Home Glencoe Accounting
12
Preparing Closing Entries
Section 10.1 Closing Entry Fourth Closing Entry—Close Withdrawals to Capital See page 261 Home Glencoe Accounting
13
Closing Entries Posted to the General Ledger
Completing the Eighth Step in the Accounting Cycle: Posting the Closing Entries to the General Ledger Posting Closing Entries and Preparing a Post-Closing Trial Balance Section 10.2 Closing Entries Posted to the General Ledger Home See page 263 Glencoe Accounting
14
Post-Closing Trial Balance
The Ninth Step in the Accounting Cycle: Preparing a Post-Closing Trial Balance Posting Closing Entries and Preparing a Post-Closing Trial Balance Section 10.2 Post-Closing Trial Balance See page 265 post-closing trial balance A list of the permanent general ledger account balances; it is prepared to prove the ledger after the closing entries are posted. Home Glencoe Accounting
Similar presentations
