1. Unit 4 The Accounting Cycle for a Merchandising Corporation
Chapter 14 Accounting for Sales and Cash Receipts
Chapter 15 Accounting for Purchases and Cash Payments
Chapter 16 Special Journals: Sales and Cash Receipts
Chapter 17 Special Journals: Purchases and Cash Payments
Chapter 18 Adjustments and the Ten-Column Work Sheet
Chapter 19 Financial Statements for a Corporation
Chapter 20 Completing the Accounting Cycle for a Merchandising Corporation
Chapter 21 Accounting for Publicly Held Corporations
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2. Chapter 20 Completing the Accounting Cycle for a Merchandising Corporation
What You’ll Learn
Journalize closing entries for a merchandising corporation.
Post closing entries to the general ledger accounts.
Prepare a post-closing trial balance.
Describe the steps in the accounting cycle.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

3. Chapter 20, Section 1 Journalizing Closing Entries
What Do You Think?
Why is net income/loss closed to Retained Earnings and not to owner’s equity?
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4. Journalizing Closing Entries
SECTION 20.1
Main Idea
A corporation’s net income (or net loss) is closed to Retained Earnings.
You Will Learn
how to journalize closing entries for a merchandising corporation.
how to journalize a net loss.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

5. Journalizing Closing Entries
SECTION 20.1
Steps for Closing the Ledger
A corporation does not have a withdrawals account, so there are only three steps to closing the ledger for a merchandising business organized as a corporation:
Close accounts with balances in the Income Statement Credit column to Income Summary.
Close accounts with balances in the Income Statement Debit column to Income Summary.
Close Income Summary to Retained Earnings.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

6. Journalizing Closing Entries
SECTION 20.1
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7. Journalizing Closing Entries
SECTION 20.1
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

8. Journalizing Closing Entries
SECTION 20.1
Closing Entry to Transfer a Net Loss
If there is a net loss, credit Income Summary for the amount and debit Retained Earnings for the amount.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

9. Chapter 20, Section 2 Posting Closing Entries
What Do You Think?
Why is the post-closing trial balance so important?
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

10. Posting Closing Entries
SECTION 20.2
Main Idea
After posting the closing entries, prepare a post-closing trial balance.
You Will Learn
how to post the closing entries for a merchandising corporation.
how to prepare a post-closing trial balance for a merchandising corporation.
about a review of the accounting cycle for a merchandising business.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

11. Posting Closing Entries
SECTION 20.2
Closing the General Ledger
When closing the general ledger, write Closing Entry for each posting in the Description column of the general ledger account.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

12. Posting Closing Entries
SECTION 20.2
Partial general ledger at the end of the fiscal period.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

13. Posting Closing Entries
SECTION 20.2
Partial general ledger at the end of the fiscal period.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

14. Posting Closing Entries
SECTION 20.2
Partial general ledger at the end of the fiscal period.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

15. Posting Closing Entries
SECTION 20.2
Partial general ledger at the end of the fiscal period.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

16. Posting Closing Entries
SECTION 20.2
Partial general ledger at the end of the fiscal period.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

17. Posting Closing Entries
SECTION 20.2
Partial general ledger at the end of the fiscal period.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

18. Posting Closing Entries
SECTION 20.2
Partial general ledger at the end of the fiscal period.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

19. Posting Closing Entries
SECTION 20.2
Preparing a Post-Closing Trial Balance
A post-closing trial balance is prepared at the end of the accounting period to prove the general ledger accounts are in balance.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

20. Posting Closing Entries
SECTION 20.2
Post-closing trial balance.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

21. Posting Closing Entries
SECTION 20.2
Completing the Accounting Cycle for a Merchandising Business
As you have learned, the accounting cycle for a merchandising business organized as a corporation consists of the following steps:
Collect and verify source documents.
Analyze each business transaction.
Journalize each transaction.
Post to the general and subsidiary ledgers.
Prepare a trial balance.
Complete a work sheet.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

22. Posting Closing Entries
SECTION 20.2
Completing the Accounting Cycle for a Merchandising Business
Prepare the financial statements–income statement, statement of retained earnings, balance sheet, and statement of cash flows.
Journalize and post the adjusting entries.
Journalize and post the closing entries.
Prepare a post-closing trial balance.
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

23. Posting Closing Entries
SECTION 20.2
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24. Chapter 20 Review Question 1
To journalize the closing entries, put the following in order:
Close temporary accounts with debit balances. ________
Close temporary accounts with credit balances. ________
Close the Income Summary account to Capital. ________
Glencoe Accounting Unit 4 Chapter 20 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

25. Chapter 20 Review
CHAPTER 20
Answer 1
Close temporary accounts with debit balances: 2
Close temporary accounts with credit balances: 1
Close the Income Summary account to Capital: 3
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26. Chapter 20 Review Question 2
How is a post-closing trial balance different from other trial balances?
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27. Chapter 20 Review
CHAPTER 20
Answer 2
The post-closing trial balance is prepared after closing entries in which temporary account balances have been transferred to the capital account. The post-closing trial balance has only permanent or balance sheet accounts. Other trial balances include both temporary and permanent accounts.
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28. Resources Glencoe Accounting Online Learning Center English Glossary
Spanish Glossary
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