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14. Recording adjusting entries Completing a work sheet does not change ledger balances, posting journal entries is necessary Adjusting entries come from the adjustment columns on the work sheet
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Recording adjusting and closing entries for a corporation
2
Completing a work sheet does not change ledger balances, posting journal entries is necessary
Adjusting entries come from the adjustment columns on the work sheet
3 LESSON 16-1
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1. Heading2. Date3. Identify the first
adjustment4. Account debited5. Debit6. Account credited7. Credit8. Continue down the
Adjustments columns
4 LESSON 16-1
page 482
5 LESSON 16-1
page 482
6 LESSON 16-1
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7 LESSON 16-1
page 483
8 LESSON 16-1
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9 LESSON 16-1
page 484
10 LESSON 16-1
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11 LESSON 16-1
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Revisiting accounting concepts:Matching Expenses with Revenue – closing entries prepare temporary accounts for the next fiscal period
Closing entries come from the income statement and balance sheet columns of the work sheet
Temporary accounts:Sales ExpensesSales discount Income SummarySales returns and allowances DividendsPurchasesPurchases discountPurchases returns and allowances
13 LESSON 16-2
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Debit balance = net loss Credit balance = net incomeIncome summary = NO normal balance
14 LESSON 16-2
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3. Debits to close
441. Heading2. Date 4. Credit to Income Summary
3333
15 LESSON 16-2
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3. Credits to close
1. Date2. Account debited
4. Debit amount
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16 LESSON 16-2
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Bal.Bal. 209,960.00209,960.00 Closing 209,960.00(New Bal. zero)
Purchases
Adj. (mdse. inv.)Adj. (mdse. inv.) 15,840.0015,840.00 Closing (credit Closing (credit amounts) amounts) 500,253.10500,253.10
Closing (debit accounts) 404,099.15 (New Bal. 80,313.95)
Income Summary
17 LESSON 16-2
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1122
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3. Credit Retained Earnings
1. Date2. Debit Income Summary
18 LESSON 16-2
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3. Credit Dividends
1. Date2. Debit Retained Earnings
1122
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19 LESSON 16-2
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List all permanent accounts with a balance
21 LESSON 16-3
3. Balances of asset accounts
4. Balances contra asset, liability, and capital accounts
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7. Double lines6. Totals5. Word Totals
2. Accounts that have balances
1. Heading
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7755
22 LESSON 16-3
11
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(continued on next slide)
1. Source documents are checked, and transactions are analyzed.
2. Transactions are recorded in journals.
3. Journal entries are posted to the accounts payable ledger, the accounts receivable ledger, and the general ledger.
4. Schedules of accounts payable and account receivable are prepared from the subsidiary ledgers.
5. A work sheet is prepared from the general ledger.
23 LESSON 16-3
6.Financial statements are prepared.
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(continued from previous slide)
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9. A post-closing trial balance of the general ledger is prepared.
8. Adjusting and closing entries are posted to the general ledger.
7. Adjusting and closing entries are journalized from the work sheet.
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