1. Financial Statements Review
Chapter
Financial Statements Review

2. Closing Entry for an Income Statement Account with a Credit Balance
Lesson 8-1
Closing Entry for an Income Statement Account with a Credit Balance
Closing 5,820.00
Closing (revenue) 5,820.00
Bal. 5,820.00
(New Bal. 0.00)
Sales
Income Summary
“S” = Sales 1
Debit
(Debit to close) 2
Credit

3. Closing Entry for Income Statement Accounts with Debit Balances
Lesson 8-1
Closing Entry for Income Statement Accounts with Debit Balances
(Credit to close)
Debit Amount
“E” = Expense
Income Summary
Credit

4. Lesson 8-1
Closing Entry to Record Net Income or Loss and Close the Income Summary Account 2
Credit
(Capital: credit to record net income)
“N” = Net Income 1
Debit
(Income Summary: debit to close)

5. Closing Entry for the Owner’s Drawing Account
Lesson 8-1
Closing Entry for the Owner’s Drawing Account
“D”= Dividends 2
Credit
(Credit to close) 1
Debit

6. General Ledger Accounts after Closing Entries Are Posted
Lesson 8-2
General Ledger Accounts after Closing Entries Are Posted
Only the permanent accounts (assets, liabilities and the owner’s capital account) still have a balance. All temporary accounts have been closed and are ready for the next fiscal period.

7. General Ledger Accounts after Closing Entries Are Posted
Lesson 8-2
General Ledger Accounts after Closing Entries Are Posted
All temporary accounts (sales, income summary, and the expense accounts) have been closed and are ready for the next fiscal period.

8. Post-Closing Trial Balance
Lesson 8-2
Post-Closing Trial Balance
List all accounts and their balances.
Total the columns to verify that the total debits equal the total credits after you have posted the adjusting and closing entries.
Now you are ready for the next month and the cycle starts all over again. 1
Compare Totals

9. Accounting Cycle for a Service Business
Lesson 8-2
Accounting Cycle for a Service Business
1. Analyze transactions 1
2. Journalize 2 8
3. Post
4. Prepare work sheet
These are the steps that are followed each month.
5. Journalize and post adjusting entries 3 7
6. Prepare financial statements 6 4
7. Journalize and post closing entries 5
8. Prepare post-closing trial balance

10. Thank you! I appreciate your extra effort!