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Recording adjusting and closing entries for a corporation

Recording adjusting and closing entries for a corporation

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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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Page 1: Recording adjusting and closing entries for a corporation

Recording adjusting and closing entries for a corporation

Page 2: 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

Page 3: Recording adjusting and closing entries for a corporation

3 LESSON 16-1

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22 11 44 5566 77

1. Heading2. Date3. Identify the first

adjustment4. Account debited5. Debit6. Account credited7. Credit8. Continue down the

Adjustments columns

Page 4: Recording adjusting and closing entries for a corporation

4 LESSON 16-1

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Page 5: Recording adjusting and closing entries for a corporation

5 LESSON 16-1

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Page 6: Recording adjusting and closing entries for a corporation

6 LESSON 16-1

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Page 7: Recording adjusting and closing entries for a corporation

7 LESSON 16-1

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Page 8: Recording adjusting and closing entries for a corporation

8 LESSON 16-1

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Page 9: Recording adjusting and closing entries for a corporation

9 LESSON 16-1

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Page 10: Recording adjusting and closing entries for a corporation

10 LESSON 16-1

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Page 11: Recording adjusting and closing entries for a corporation

11 LESSON 16-1

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Page 12: Recording adjusting and closing entries for a corporation

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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

Page 13: Recording adjusting and closing entries for a corporation

13 LESSON 16-2

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Debit balance = net loss Credit balance = net incomeIncome summary = NO normal balance

Page 14: Recording adjusting and closing entries for a corporation

14 LESSON 16-2

1122

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3. Debits to close

441. Heading2. Date 4. Credit to Income Summary

3333

Page 15: Recording adjusting and closing entries for a corporation

15 LESSON 16-2

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3. Credits to close

1. Date2. Account debited

4. Debit amount

33

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Page 16: Recording adjusting and closing entries for a corporation

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

Page 17: Recording adjusting and closing entries for a corporation

17 LESSON 16-2

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3. Credit Retained Earnings

1. Date2. Debit Income Summary

Page 18: Recording adjusting and closing entries for a corporation

18 LESSON 16-2

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3. Credit Dividends

1. Date2. Debit Retained Earnings

1122

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Page 19: Recording adjusting and closing entries for a corporation

19 LESSON 16-2

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Page 20: Recording adjusting and closing entries for a corporation

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List all permanent accounts with a balance

Page 21: Recording adjusting and closing entries for a corporation

21 LESSON 16-3

3. Balances of asset accounts

4. Balances contra asset, liability, and capital accounts

11

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7. Double lines6. Totals5. Word Totals

2. Accounts that have balances

1. Heading

22

33

44

7755

Page 22: Recording adjusting and closing entries for a corporation

22 LESSON 16-3

11

22

33

4455

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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.

Page 23: Recording adjusting and closing entries for a corporation

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.