1. Lesson 26-4
ADJUSTING ENTRIES
Lesson 26-4, page 675

2. CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES1 2
1. Enter the balance of accounts in the Income Statement credit column as a debit.
2. Enter the total of debit entries as a credit to Income Summary.
Lesson 26-4, page 676

3. CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES
1. Enter Income Summary.
2. Enter the balance of every account in the Income Statement debit column as a credit. 1 3 2
3. Enter the total as a debit to Income Summary.
Lesson 26-4, page 677

4. CLOSING ENTRY TO RECORD NET INCOME1 2
1. Debit Income Summary
2. Credit Retained Earnings
Lesson 26-4, page 678

5. CLOSING ENTRY FOR DIVIDENDS1 2
1. Debit Retained Earnings
2. Credit Dividends
Lesson 26-4, page 678

6. REVERSING ENTRIES
1. Reverse the entry that created a balance in Interest Receivable. 1
2. Reverse the entry that created a balance in Interest Payable. 2 3
3. Reverse the entry that created a balance in Federal Income Tax Payable.
Lesson 26-4, page 679

7. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION
1. Source documents checked for accuracy, and transactions are analyzed.
2. Transactions are recorded in journals. 2 1
3. Journal entries are posted to ledgers. 9
4. Schedules of accounts payable and accounts receivable are prepared from subsidiary ledgers. 3 8 4 5
5. Work sheet is prepared.
6. Financial statements are prepared. 7
7. Adjusting and closing entries are journalized.
8. A post-closing trial balance is prepared. 6
9. Reversing entries are journalized and posted to the general ledger.
Lesson 26-4, page 680