FINANCIAL STATEMENTS AND THE CLOSING PROCESS

FINANCIAL STATEMENTS AND THE CLOSING PROCESS
CHAPTER SIX FINANCIAL STATEMENTS AND THE CLOSING PROCESS

WORK SHEET Used for three major end-of-period activities:
journalizing adjusting entries preparing financial statements journalizing closing entries

From this work sheet, we can prepare the financial statements.
ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. From this work sheet, we can prepare the financial statements. 175 175 Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp. 700 700 Rent Exp. 200 200 Sup. Exp 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 1015 1015 2150 2150 4965 4965

PREPARING FINANCIAL STATEMENTS
1st: Prepare the Income Statement. 2nd: Prepare the Statement of Owner’s Equity. 3rd: Prepare the Balance Sheet.

Heading should contain 3 lines: 1. Company Name 2. Statement Title
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Heading should contain 3 lines: 1. Company Name 2. Statement Title 3. Time period covered or date

Revenues are shown first.
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Revenues are shown first.

Revenue ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR.
Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Revenue Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp. 700 700 Rent Exp 200 200 Sup. Exp. 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 1015 1015 2150 2150 4965 4965

Top amount in each column will include “$”.
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Delivery Fees $2,150 Top amount in each column will include “$”.

When there is only one revenue account,
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Delivery Fees $2,150 When there is only one revenue account, “Total Revenues” is not computed or shown.

Expenses are shown next.
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Delivery Fees $2,150 Expenses: Expenses are shown next.

Expenses ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR.
Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Expenses Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts Pay 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp. 700 700 Rent Exp. 200 200 Sup. Exp. 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 1015 1015 2150 2150 4965 4965

First amount in the column
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Delivery Fees $2,150 Expenses: Wages Expense $ 700 First amount in the column is shown with a “$”.

Expenses are listed in either: account number order
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Delivery Fees $2,150 Expenses: Wages Expense $ 700 Rent Expense 200 Supplies Expense 60 Telephone Expense 50 Insurance Expense 25 Depreciation Expense - Delivery Eq. 100 Expenses are listed in either: account number order OR descending order by dollar amount.

Single underline indicates addition or subtraction.
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Delivery Fees $2,150 Expenses: Wages Expense $ 700 Rent Expense 200 Supplies Expense 60 Telephone Expense 50 Insurance Expense 25 Depreciation Expense - Delivery Eq. 100 Single underline indicates addition or subtraction.

Next, expenses are totaled.
Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20-- Revenues: Next, expenses are totaled. Delivery Fees $2,150 Expenses: Wages Expense $ 700 Rent Expense 200 Supplies Expense 60 Telephone Expense 50 Insurance Expense 25 Depreciation Expense - Delivery Eq. 100 Total Expenses 1,135

Jessica Jane’s Campus Delivery Income Statement For Month Ended June 30, 20--
Revenues: Delivery Fees $2,150 Expenses: Wages Expense $ 700 Rent Expense 200 Supplies Expense 60 Telephone Expense 50 Insurance Expense 25 Depreciation Expense - Delivery Eq. 100 Total Expenses 1,135 Net Income $1,015

Jessica Jane, capital, June 1, 20-- Statement starts with the
Jessica Jane’s Campus Delivery Statement of Owner’s Equity For Month Ended June 30, 20-- Jessica Jane, capital, June 1, 20-- Statement starts with the Capital balance as of the beginning of the accounting period.

Instead of showing Revenue increasing &
Jessica Jane’s Campus Delivery Statement of Owner’s Equity For Month Ended June 30, 20-- Jessica Jane, capital, June 1, 20-- $2,000 Instead of showing Revenue increasing & Expenses decreasing the Owner’s Equity, this statement uses the net effect (Net Income/Loss) from the Income Statement.

Be careful!! Capital from the work sheet
ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Del. Eq. 3600 3600 A. D.-Del Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Be careful!! Capital from the work sheet may not be the beginning capital balance. It is the beginning balance PLUS any additional investments. Wages Exp 700 700 Rent Exp 200 200 Sup. Exp 60 60 Tel. Exp 50 50 Ins. Exp 25 25 Depr. Exp 100 100 6100 6100 1135 2150 4965 3950 1015 1015 2150 2150 4965 4965

Since Jessica made no additional investments this period, we can
Jessica Jane’s Campus Delivery Statement of Owner’s Equity For Month Ended June 30, 20-- Jessica Jane, capital, June 1, 20-- $2,000 Since Jessica made no additional investments this period, we can use the capital balance from the work sheet.

Next we add in the Net Income/Loss from the Income Statement or
Jessica Jane’s Campus Delivery Statement of Owner’s Equity For Month Ended June 30, 20-- Jessica Jane, capital, June 1, 20-- $2,000 Next we add in the Net Income/Loss from the Income Statement or from the work sheet.

Net Income is found in the Income Statement debit column
ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Del. Eq. 3600 3600 A. D.-Del Eq. 100 100 Net Income is found in the Income Statement debit column and the Balance Sheet credit column. Accts. Pay 1800 1800 Wages Pay 50 50 J J, Cap 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp 700 700 Rent Exp. 200 200 Sup. Exp. 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 Net Income 1015 1015 2150 2150 4965 4965

work sheet for the Drawing
Jessica Jane’s Campus Delivery Statement of Owner’s Equity For Month Ended June 30, 20-- Jessica Jane, capital, June 1, 20-- $2,000 Net Income for June $1,015 Less: Withdrawals for June Now we will go to the work sheet for the Drawing account.

Drawing account tells us the amount
ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp. 700 700 Rent Exp 200 200 Drawing account tells us the amount of assets Jessica has withdrawn from business for personal use. Sup. Exp 60 60 Tel. Exp 50 50 Ins. Exp 25 25 Depr. Exp 100 100 6100 6100 1135 2150 4965 3950 Net Income 1015 1015 2150 2150 4965 4965

Lastly, we calculate the ending Capital balance and double
Jessica Jane’s Campus Delivery Statement of Owner’s Equity For Month Ended June 30, 20-- Jessica Jane, capital, June 1, 20-- $2,000 Net Income for June $1,015 Less: Withdrawals for June 150 Increase in Capital 865 Jessica Jane, capital, June 30, 20-- $2,865 Lastly, we calculate the ending Capital balance and double rule the statement.

FORMS OF BALANCE SHEETS
REPORT FORM ACCOUNT FORM Liabilities and Owner’s Equity are shown BELOW the Asset section. This is the form you will see from now on in this text. Asset section is on the LEFT, Liabilities and Owner’s Equity sections are on the RIGHT. This is the form you saw in chapters 2-5.

CLASSIFIED BALANCE SHEET
Similar items are grouped together Assets are classified as: Current Assets Property, Plant, and Equipment Liabilities are classified as: Current Liabilities Long Term Liabilities

CURRENT ASSETS Assets (including cash) that will be converted into cash or consumed within one year or the normal operating cycle, whichever is longer Examples: Cash, Accounts Receivable, Supplies, Prepaid Insurance

Purchase Supplies and Services
OPERATING CYCLE The time period required to purchase supplies and services and convert them back into cash Provide Services for Cash and “On Account” Purchase Supplies and Services Collect Receivables Back to Cash Start with cash

PROPERTY, PLANT, AND EQUIPMENT
Assets that are expected to serve the business for many years Also called Plant Assets or Long-Term Assets Examples: Land, Buildings, and Equipment

CURRENT LIABILITIES Liabilities that are due within one year or the normal operating cycle of the business, whichever is longer They will be paid out of current assets. Examples: Accounts Payable Wages Payable

LONG-TERM LIABILITIES
Obligations that are not expected to be paid within a year and do not require the use of current assets Also called Long-Term Debt Example: Mortgage on an office building Jessica Jane does not have any long-term liabilities.

Jessica Jane’s Campus Delivery Balance Sheet June 30, 20--
Assets Current Assets Current Assets are listed first.

Current Assets ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR.
CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Current Assets Del. Fees 2150 2150 Wages Exp. 700 700 Rent Exp. 200 200 Sup. Exp 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 Net Income 1015 1015 2150 2150 4965 4965

Assets Current Assets Cash $370 Accounts Receivable 650 Supplies 20 Prepaid Insurance 175 Total Current Assets $1,215 Property, Plant, and Equipment The long-term assets are listed next.

Property, Plant, and Equipment includes the long-term assets
ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Del. Eq 3600 3600 A. D.-Del Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay 50 50 J J, Cap Property, Plant, and Equipment includes the long-term assets AND their related Accumulated Depreciation accounts. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp 700 700 Rent Exp 200 200 Sup. Exp 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 Net Income 1015 1015 2150 2150 4965 4965

Assets Current Assets Cash $370 Accounts Receivable 650 Supplies 20 Prepaid Insurance 175 Total Current Assets $1,215 Property, Plant, and Equipment Delivery Equipment $3,600 Accumulated Depr. - Delivery Eq. 100 3,500 Book Value

Assets Current Assets Cash $370 Accounts Receivable 650 Supplies 20 Now for the Liabilities!!! Prepaid Insurance 175 Total Current Assets $1,215 Property, Plant, and Equipment Delivery Equipment $3,600 Accumulated Depr. - Delivery Eq. 100 3,500 Total Assets $4,715 Liabilities

Assets Current Assets Cash $370 Just as with assets, the current (or short-term) are shown first. Accounts Receivable 650 Supplies 20 Prepaid Insurance 175 Total Current Assets $1,215 Property, Plant and Equipment Delivery Equipment $3,600 Accumulated Depr. - Delivery Eq. 100 3,500 Total Assets $4,715 Liabilities Current Liabilities

Jessica has only two liabilities and they are both current….
ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp Jessica has only two liabilities and they are both current…. Accounts Payable and Wages Payable 700 700 Rent Exp 200 200 Sup. Exp 60 60 Tel. Exp 50 50 Ins. Exp 25 25 Depr. Exp 100 100 6100 6100 1135 2150 4965 3950 Net Income 1015 1015 2150 2150 4965 4965

Assets Current Assets Cash $370 Accounts Receivable 650 Supplies 20 Prepaid Insurance 175 Let’s shift to the lower part of our Balance Sheet. Total Current Assets $1,215 Property, Plant and Equipment Delivery Equipment $3,600 Accumulated Depr. - Delivery Eq. 100 3,500 Total Assets $4,715 Liabilities Current Liabilities Accounts Payable $1,800

Liabilities Current Liabilities Accounts Payable $1,800 Wages Payable 50 Total Current Liabilities $1,850 Owner’s Equity Since Jessica does not have long-term liabilities, we will move on to the Owner’s Equity section.

Caution!!! This capital amount does not include Net Income or Drawing.
ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR. CR. DR. CR. Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp. 700 700 Caution!!! This capital amount does not include Net Income or Drawing. We must use the June 30th capital amount from the Statement of Owner’s Equity. Rent Exp. 200 200 Sup. Exp. 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 Net Income 1015 1015 2150 2150 4965 4965

will put on the Balance Sheet.
Jessica Jane’s Campus Delivery Statement of Owner’s Equity For Month Ended June 30, 20-- Jessica Jane, capital, June 1, 20-- $2,000 Net Income for June $1,015 Less: Withdrawals for June 150 Increase in Capital 865 Jessica Jane, capital, June 30, 20-- $2,865 This is the amount we will put on the Balance Sheet.

Liabilities Current Liabilities Accounts Payable $1,800 Wages Payable 50 Total Current Liabilities $1,850 Owner’s Equity Jessica Jane, Capital 2,865 Total Liabilities and Owner’s Equity $4,715 It Balances!!! Total Assets of $4,715 equals Total Liabilities and Owner’s Equity of $4,715.

CLOSING PROCESS Gives temporary accounts zero balances so they are prepared to accumulate new information for the next accounting period Involves four closing journal entries Income Summary account is used to aid in the closing process.

PERMANENT ACCOUNTS All accounts reported on the Balance Sheet
Assets (including contra-assets) Liabilities Capital account Contain the results of all transactions since the business started NOT CLOSED

TEMPORARY ACCOUNTS Accumulate information for a specific accounting period All accounts not on the Balance Sheet Revenues Expenses Drawing These accounts are closed.

CLOSING ENTRY ENTRY #1 Close Revenue Accounts to Income Summary

Revenue ACCOUNT TITLE ADJ. T. B. INCOME STMT BALANCE SHEET DR. CR. DR.
Cash 370 370 Accts. Rec. 650 650 Supplies 20 20 Ppd. Ins. 175 175 Revenue Del. Eq. 3600 3600 A. D.-Del. Eq. 100 100 Accts. Pay. 1800 1800 Wages Pay. 50 50 J J, Cap. 2000 2000 J J, Drawing 150 150 Del. Fees 2150 2150 Wages Exp. 700 700 Rent Exp. 200 200 Sup. Exp. 60 60 Tel. Exp. 50 50 Ins. Exp. 25 25 Depr. Exp. 100 100 6100 6100 1135 2150 4965 3950 1015 1015 2150 2150 4965 4965

To reduce this account’s balance to
CLOSING ENTRY ENTRY #1 Close Revenue Accounts to Income Summary DELIVERY FEES 2,150 Bal. (1) 2,150 To reduce this account’s balance to zero, we must debit it $2,150.

We are, in effect, transferring Income Summary account.
CLOSING ENTRY ENTRY #1 Close Revenue Accounts to Income Summary DELIVERY FEES INCOME SUMMARY 2,150 2,150 (1) (1) 2,150 We are, in effect, transferring the balance to the Income Summary account.

CLOSING ENTRY ENTRY #1 Close Revenue Accounts to Income Summary 2,150
DELIVERY FEES INCOME SUMMARY 2,150 Bal. 2,150 (1) (1) 2,150 Let’s Journalize this entry!

Instead of an explanation after written before the first entry.
GENERAL JOURNAL DATE DESCRIPTION DEBIT PR CREDIT 1 Closing Entries 2 3 4 Instead of an explanation after each closing entry, “Closing Entries” is written before the first entry. 5 6 7 8 9 10 11

GENERAL JOURNAL Closing Entries DATE DESCRIPTION DEBIT PR CREDIT 1
20-- 2 June 30 Delivery Fees 3 Income Summary 4 5 6 7 8 9 10 11

Each expense account is closed in this one closing entry.
Close Expense Accounts to Income Summary Each expense account is closed in this one closing entry.

Expenses have debit balances…. Therefore, to close them, they
Wages Expense Bal. 700 700 (2) Expenses have debit balances…. Therefore, to close them, they must be credited.

Wages Expense is now closed; the $700 balance will be
(2) Wages Expense is now closed; the $700 balance will be transferred to Income Summary along with the balances of all the other expense accounts.

All the expense account balances are combined and Income Summary is
Wages Expense Rent Expense Income Summary Bal. 700 700 (2) Bal. 200 200 (2) (2) 1,135 2,150 1,015 Bal. Supplies Expense Telephone Expense Bal. 60 60 (2) Bal. 50 50 (2) All the expense account balances are combined and Income Summary is debited for the total. Insurance Expense Depr. Expense - Del. Eq. Bal. 25 25 (2) Bal. 100 100 (2)

Let’s journalize this entry!
Wages Expense Rent Expense Income Summary Bal. 700 700 (2) Bal. 200 200 (2) (2) 1,135 2,150 1,015 Bal. Supplies Expense Telephone Expense Bal. 60 60 (2) Bal. 50 50 (2) Let’s journalize this entry! Insurance Expense Depr. Expense - Del. Eq. Bal. 25 25 (2) Bal. 100 100 (2)

GENERAL JOURNAL This is a compound journal entry…..
One debit which equals the six credits DATE DESCRIPTION DEBIT PR CREDIT 1 Closing Entries 20-- 2 June 30 Delivery Fees 3 Income Summary 4 5 30 Income Summary 6 Wages Expense 7 Rent Expense 8 Supplies Expense 60 00 9 Telephone Expense 50 00 10 Insurance Expense 25 00 11 Depr. Exp.-Delivery Equip.

CLOSING ENTRY ENTRY #3 Close Income Summary to Capital REVENUES
2,150

CLOSING ENTRY ENTRY #3 Close Income Summary to Capital EXPENSES
1,135 2,150 EXPENSES

The balance in Income Summary
CLOSING ENTRY ENTRY #3 Close Income Summary to Capital INCOME SUMMARY 1,135 2,150 1,015 Bal. The balance in Income Summary is the Net Income.

By debiting Income Summary,
CLOSING ENTRY ENTRY #3 Close Income Summary to Capital INCOME SUMMARY 1,135 2,150 (3) 1,015 1,015 Bal. By debiting Income Summary, we close the account.

We transfer the Net Income into the Capital account.
CLOSING ENTRY ENTRY #3 Close Income Summary to Capital INCOME SUMMARY J. JANE, CAPITAL 1,135 2,150 2,000 Bal. 1,015 (3) 1,015 1,015 Bal. We transfer the Net Income into the Capital account.

GENERAL JOURNAL continued
DATE DESCRIPTION DEBIT PR CREDIT 12 Closing Entries continued 20-- 13 June 30 Income Summary 14 Capital 15 16 17 18 19 20 21 22

CLOSING ENTRY ENTRY #4 Close Drawing to Capital J. JANE, DRAWING
J. JANE, CAPITAL Bal. 150 2,000 150 (4) 1,015 3,015 Bal. (4) 150

CLOSING ENTRY ENTRY #4 Close Drawing to Capital J. JANE, DRAWING
J. JANE, CAPITAL Bal. 150 2,000 150 (4) 1,015 3,015 Bal. (4) 150 The Capital account now reflects the ending balance shown on the Statement of Owner’s Equity. 2,865 Bal.

GENERAL JOURNAL continued
DATE DESCRIPTION DEBIT PR CREDIT 12 Closing Entries continued 20-- 13 June 30 Income Summary 14 Capital 15 16 30 J. Jane, Capital 17 J. Jane, Drawing 18 The Closing Entries are then posted to the General Ledger accounts. 19 20 21 22

FOUR-COLUMN ACCOUNT 401 DELIVERY FEES “Closing” is written in the
Account No. Account: “Closing” is written in the Item area. BALANCE DATE ITEM PR DR. CR. DR. CR. 20-- June 6 J1 500 500 15 J1 600 1100 30 J2 1050 2150 30 Closing

to signify a zero balance.
FOUR-COLUMN ACCOUNT 401 DELIVERY FEES Account No. Account: BALANCE DATE A line is drawn through to signify a zero balance. ITEM PR DR. CR. DR. CR. 20-- June 6 J1 500 500 15 J1 600 1100 30 J2 1050 2150 30 Closing J4 2150

POST-CLOSING TRIAL BALANCE
Prepared after closing entries To prove the equality of the debit and credit balances in the general ledger accounts Only accounts which remain open (permanent accounts) are listed.

There are only Permanent accounts on the Post-Closing Trial Balance.
Jessica Jane’s Campus Delivery Post-Closing Trial Balance June 30, 20-- Account Title Acct No. Debit Balance Credit Balance Cash 101 370 Accounts Receivable 122 650 Supplies 141 20 Prepaid Insurance 145 175 There are only Permanent accounts on the Post-Closing Trial Balance. Delivery Equipment 185 3600 Accumulated Depr.-Delivery Eq. 185.1 100 Accounts Payable 202 1800 Wages Payable 219 50 Jessica Jane, Capital 311 2865 4815 4815

ACCOUNTING CYCLE Analyze source documents. Journalize the transaction.
Post to the ledger accounts. Prepare a trial balance. Determine and prepare the needed adjustments on the work sheet.

ACCOUNTING CYCLE cont. Complete an end-of-period work sheet.
Prepare an income statement, statement of owner’s equity, and balance sheet. Journalize and post the adjusting entries. Journalize and post the closing entries. Prepare a post-closing trial balance.

FINANCIAL STATEMENTS AND THE CLOSING PROCESS

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FINANCIAL STATEMENTS AND THE CLOSING PROCESS

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