1. The Accounting Cycle Completed – Adjusting, Closing, and Post-Closing Trial Balance
Chapter 5 2

2. End of the Period Activities
Adjusting entries must be entered in the journal and posted.
Closing entries must be journalized at the end of the accounting period so that income can be measured for the new period.
Temporary accounts are closed. 4

3. End of the Period Activities
Accounting Cycle
Analyze Transactions
Record, Journalize,
and Post
Prepare
Trial Balance

4. End of the Period Activities
Prepare Adjustments
Complete Worksheet
Prepare Reports
Close the Accounting
Period

5. Journalizing and posting
Learning Objective 1
Journalizing and posting
adjusting entries. 5

6. Learning Unit 5-1 Adjusting entries
Assets must be adjusted to show amounts used or allocated to periods and recorded as expenses.
supplies used
prepaid rent expired over time
equipment depreciated 5

7. Journalizing and posting adjusting entries
Learning Unit 5-1
Journalizing and posting adjusting entries
The worksheet is complete.
The books are not up to date.
Adjusting entries are taken from the worksheet and journalized.
The journal entries must be posted.

8. Journalizing and posting
Learning Objective 2
Journalizing and posting
closing entries. 5

9. Journalizing and posting closing entries
Learning Unit 5-2
Journalizing and posting closing entries
Closing is a mechanical step which sets temporary accounts to zero so that they are ready for a new measurement period. 7

10. Learning Unit 5-2 What are permanent accounts? assets liabilities
capital
balance sheet accounts 8

11. Learning Unit 5-2 Permanent accounts are also called real accounts.
Balances are carried forward. 8

12. Learning Unit 5-2 What are temporary accounts? revenue expenses
withdrawals 9

13. Learning Unit 5-2 New data is accumulated each period.
Temporary accounts are also called nominal accounts.
Balances are set to zero. 9

14. Learning Unit 5-2 Closing entries: There are four steps to perform.
Debit revenue accounts and credit the Income Summary account.
Debit the Income Summary account and credit expense accounts.

15. Learning Unit 5-2
Debit or credit the Income Summary account and debit or credit the Capital account.
Debit the Capital account and credit the Withdrawals account.

16. Four Steps in Journalizing Closing Entries
Learning Unit 5-2
Four Steps in Journalizing Closing Entries
Step 2:
Expenses
Step 1:
Revenue
Step 3:
Income Summary
Net Income or Loss`
Step 4:
Withdrawals
Capital

17. (Close Revenue Account)
Learning Unit 5-2
(Close Revenue Account)
Income
Summary
Revenue
3,450
3,450
(Close Expense
Accounts)
1,455
3,450
1,955
Various Exp
(Close Income
Summary)
1,205
1,205
Capital
Account
Dep. Exp
1,955
Supplies Exp

18. Prepare a post-closing
Learning Objective 3
Prepare a post-closing
trial balance. 5

19. Learning Unit 5-3 The post-closing trial balance:
Step 8 of the Accounting Cycle
The post-closing trial balance helps prove the accuracy of the adjusting and closing process.
It contains the true ending figure for capital.
It contains only permanent accounts.

20. Adjustments Example Adjusted Trial Balance Adjustments Trial Balance
Account Title Dr. Cr Dr Cr. Dr. Cr.
Cash
Accounts receivable
Supplies
Equipment
Accum. depreciation
Accounts payable
Capital
Revenue
Various expenses
Supplies expense
Depreciation expense
Totals
4,065
850
300
1,200
1,205
7,620
4,065
1,850
100
1,200
1,205
200 50
8,670
a) 1,000 b) c)
1,250 b) c)
a) 1,000
1,250
170
5,000
2,450
7,620 50
170
5,000
3,450
8,670

21. Adjustments Example Adjusted Income Balance
Trial Balance Statement Sheet
Account Title Dr. Cr Dr Cr. Dr. Cr.
Cash
Accounts receivable
Supplies
Equipment
Accum. depreciation
Accounts payable
Capital
Revenue
Various expenses
Supplies expense
Depreciation expense
Totals
4,065
1,850
100
1,200
1,205
200 50
8,670
4,065
1,850
100
1,200
7,215 50
170
5,000
3,450
8,670 50
170
5,000
5,220
3,450
1,205
200 50
1,455
Net income
1, ,995
3, , , ,215

22. Post Closing Trial Balance
Cash $4,065
Accounts Receivable ,850
Supplies
Equipment ,200
Total $7,215
Accumulated Depreciation: Equipment
Accounts Payable
Clara J., Capital ,995
Total $7,215

23. End of Chapter 5