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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 16-2 Recording Closing Entries for Income Statement Accounts.

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Presentation on theme: "CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 16-2 Recording Closing Entries for Income Statement Accounts."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 16-2 Recording Closing Entries for Income Statement Accounts

2 CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 16-2 THE INCOME SUMMARY ACCOUNT page 487 Classified as a temporary capital (OE/SE) account.

3 CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 16-2 Order of Closing Accounts: 1 st – close accounts with credit balances – REVENUE & CONTRA COST ACCOUNTS Into Income Summary 2 nd – close accounts with debit balances – COST, CONTRA REVENUE, & EXPENSE ACCOUNTS Into Income Summary 3 rd – close NET INCOME or NET LOSS - Income Summary Into Retained Earnings 4 th – close DIVIDENDS Into Retained Earnings

4 CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 16-2 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES 1 2 page 488 3.Debits to close 4 1.Heading 2.Date4.Credit to Income Summary 33

5 CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 16-2 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES 1 24 page 489 3.Credits to close 1.Date 2.Account debited 4.Debit amount 3 3

6 CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 16-2 SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 490 Bal.209,960.00Closing 209,960.00 (New Bal. zero) Purchases Adj. (mdse. inv.)15,840.00Closing (credit amounts)500,253.10 Closing (debit accounts)404,099.15(New Bal.80,313.95) Income Summary

7 CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 16-2 CLOSING ENTRY TO RECORD NET INCOME page 491 1 2 3 3.Credit Retained Earnings 1.Date 2.Debit Income Summary *Net Loss – Debit Retained Earnings Credit Income Summary

8 CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 16-2 CLOSING ENTRY FOR DIVIDENDS page 491 3.Credit Dividends 1.Date 2.Debit Retained Earnings 1 2 3

9 CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 16-2 COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNAL page 492


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