questions that you need to ask yourself. have you understood everything up to this point?have you...
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Questions that you need to Questions that you need to ask yourself.ask yourself.
• Have you understood everything up to Have you understood everything up to this point?this point?
• Can you tell me what step in the Can you tell me what step in the accounting cycle you are on now?accounting cycle you are on now?
• What does it mean to post? To What does it mean to post? To Journalize?Journalize?
• Why do we do a worksheet?Why do we do a worksheet?• On the balance sheet how do we get On the balance sheet how do we get
the balance for the Capital account?the balance for the Capital account?
• Please get out your textbook open to Please get out your textbook open to page page
• Do you have my handouts for this Do you have my handouts for this class?class?
• Turn your brain on…..Turn your brain on…..
Terms that you need to Terms that you need to knowknow
• Adjusting EntriesAdjusting Entries– Used to bring accounts up to date at the Used to bring accounts up to date at the
end of the year.end of the year.• SuppliesSupplies• InventoryInventory• Value of assets decreaseValue of assets decrease
– Recorded directly from the WorksheetRecorded directly from the Worksheet
General JournalGeneral Journal Page 1Page 1
DateDate Account TitleAccount Title Doc NoDoc No Post RefPost Ref DebitDebit CreditCredit
Adjusting Ent.Adjusting Ent.
AugAug 3131 Supplies ExpenseSupplies Expense 25642564
Supplies Supplies 25642564
31 31 Insurance ExpenseInsurance Expense 100100
Prepaid InsurancePrepaid Insurance 100100
AccountSupplies Expense Account NO 530
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 2564 2564
530
Account Supplies Account NO 150
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 2564 2564
150
AccountInsurance Expense Account NO 510
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 100 100
AccountPrepaid
Insurance Account NO 160
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 100 100
510160
Date Account TitleDoc No
Post Ref Debit Credit
Adjusting Entries
Feb 28 Supplies Expense
Supplies
520520
520
28 Insurance Expense28
Pre-paid Insurance
300
300
Once you have journalized this information we must post it into the journal andThen post reference it in the Journal
530
150
510
160
“On your own” 9-1
Closing EntriesClosing Entries
• Temporary AccountsTemporary Accounts– All accounts that are closed at the end of each All accounts that are closed at the end of each
fiscal periodfiscal period– These are accounts that we need to zero out at These are accounts that we need to zero out at
the end of each fiscal period.the end of each fiscal period.– Any Revenue, or Expense AccountAny Revenue, or Expense Account
• Permanent AccountsPermanent Accounts– Accounts that are left open for the life of the Accounts that are left open for the life of the
businessbusiness– Any Asset, Liability, or the Owner’s Equity Any Asset, Liability, or the Owner’s Equity
AccountAccount
The income summary The income summary AccountAccount
• This is a account that has no This is a account that has no balance.balance.– We use this account to put all of our We use this account to put all of our
numbers together.numbers together.– It is used to help us determine our net It is used to help us determine our net
income or net loss.income or net loss.
4 step process in doing 4 step process in doing closing entriesclosing entries
• Step 1Step 1– Close all accounts that have a Close all accounts that have a credit credit
balancebalance in the Income statement in the Income statement columns to the Income Summarycolumns to the Income Summary
Please open your textbook to pg 160 where the overlay pages were in the last chapter
General Journal Page 1
Date Account Title Doc No Post Ref Debit Credit
Closing Ent
Aug 31 Sales 4411
Income Summary 4411
Account Sales Account NO 410
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 4411
31 G1 4411 ------- ------
410
AccountIncome
Summary Account NO 330
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 4411 4411
330
4 step process in doing 4 step process in doing closing entriesclosing entries
• Step 1Step 1– Close all accounts that have a Close all accounts that have a credit credit
balancebalance in the Income statement in the Income statement columns to the Income Summarycolumns to the Income Summary
• Step 2Step 2– Close all accounts that have a Close all accounts that have a debit debit
balancebalance in the Income statement in the Income statement columns to the Income summary.columns to the Income summary.
Income Summary
Sales
44114411 -0-
4411
Miscellaneous Exp
10
Rent Expense
250
Supplies Expense
2564
Utilities Expense
115
Advertising Exp
273Insurance Exp
100
General Journal Page 1
Date Account Title Doc No Post Ref Debit Credit
Closing Ent
Aug 31 Sales 410 4411
Income Summary 330 4411
31 Income Summary 330 3312
Advert. Exp 510 273
Insurance Exp. 520 100
Miscellaneous Exp 530 10
Rent Ex 535 250
Supplies Expense 540 2564
Utilities Expense 550 115
AccountAd
Expense Account NO 510
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 273
273 ------ -------
AccountInsuranc
e Exp Account NO 520
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 31 G1 100 100
G1 100 ----- ------
AccountSupp Exp Account NO 540
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 2564 2564
2564 ---- -----
AccountMisc. Exp Account NO 530
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 G1 10 10
31 10 ----- -----
3312
4 step process in doing 4 step process in doing closing entriesclosing entries
• Step 1Step 1– Close all accounts that have a Close all accounts that have a credit balancecredit balance in the in the
Income statement columns to the Income statement columns to the Income SummaryIncome Summary
• Step 2Step 2– Close all accounts that have a Close all accounts that have a debit balancedebit balance in the in the
Income statement columns to the Income statement columns to the Income summaryIncome summary..
• Step 3Step 3– Close the Close the income summary to the Capital Accountincome summary to the Capital Account
• The total in the income summary should equal the net The total in the income summary should equal the net income or loss on the worksheetincome or loss on the worksheet
General Journal Page 1
Date Account Title Doc No Post Ref Debit Credit
Closing Ent
Aug 31 Sales 410 4411
Income Summary 330 4411
31 Income Summary 330 3312
Advert. Exp 510 273
Insurance Exp. 520 100
Miscellaneous Exp 530 10
Rent Ex 535 250
Supplies Expense 540 2564
Utilities Expense 550 115
Income Summary
Sales
44114411 -0-
4411
Miscellaneous Exp
10
Rent Expense
250
Supplies Expense
2564
Utilities Expense
115
Advertising Exp
273Insurance Exp
100273-0-
100-0-
10-0-
250-0-
2564-0-
115-0-
3312
1099
Income Summary
4411
1099This should be The total of the net incomeOn the worksheet
Since this has a balance on the Credit sideWe must debit it and transfer it to the
Capital Account
3312
4 step process in doing 4 step process in doing closing entriesclosing entries
• Step 1Step 1– Close all accounts that have a Close all accounts that have a credit balancecredit balance in the in the
Income statement columns to the Income statement columns to the Income SummaryIncome Summary
• Step 2Step 2– Close all accounts that have a Close all accounts that have a debit balancedebit balance in the in the
Income statement columns to the Income statement columns to the Income summaryIncome summary..
• Step 3Step 3– Close the Close the income summary to the Capital Accountincome summary to the Capital Account
• The total in the income summary should equal the net The total in the income summary should equal the net income or loss on the worksheetincome or loss on the worksheet
Income Summary
Sales
44114411 -0-
4411
Miscellaneous Exp
10
Rent Expense
250
Supplies Expense
2564
Utilities Expense
115
Advertising Exp
273Insurance Exp
100273-0-
100-0-
10-0-
250-0-
2564-0-
115-0-
3312
1099
Barbara Trevino, Cap
General Journal Page 1
Date Account Title Doc No Post Ref Debit Credit
Closing Ent
Aug 31 Sales 4411
Income Summary 4411
31 Income Summary 3312
Advertising Expense 273
Insurance Expense 100
Miscellaneous 10
Rent Expense 50
Supplies Expense 2564
Utilities Expense 115
31 Income Summary 1099
Barbara Trevino, Cap 1099
AccountIncome
Summary Account NO 330
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 g1 4411 4411
31 G1 3312 1099
31 1099 ------ -------
Account Capital Account NO 310
Date Item Post Ref Debit Credit
Balance
Debit Credit
Aug 31 Bal -------
31 G1 1099 1099
4 step process in doing 4 step process in doing closing entriesclosing entries
• Step 1Step 1– Close all accounts that have a credit balance in Close all accounts that have a credit balance in
the Income statement columns to the Income the Income statement columns to the Income SummarySummary
• Step 2Step 2– Close all accounts that have a debit balance in Close all accounts that have a debit balance in
the Income statement columns to the Income the Income statement columns to the Income summary.summary.
• Step 3Step 3– Close the income summary to the Capital AccountClose the income summary to the Capital Account
• The total in the income summary should equal the net The total in the income summary should equal the net income or loss on the worksheetincome or loss on the worksheet
• Step 4Step 4– Close the Drawing into the Capital AccountClose the Drawing into the Capital Account
Income Summary
Sales
44114411 -0-
4411
Miscellaneous Exp
10
Rent Expense
250
Supplies Expense
2564
Utilities Expense
115
Advertising Exp
273Insurance Exp
100273-0-
100-0-
10-0-
250-0-
2564-0-
115-0-
3312
1099
Barbara Trevino, Cap
1099-0-
1099
Since the drawing has a debit balance it needs to be closed with a credit Balance to be placed into the Capital Account
4 step process in doing 4 step process in doing closing entriesclosing entries
• Step 1Step 1– Close all accounts that have a credit balance in Close all accounts that have a credit balance in
the Income statement columns to the Income the Income statement columns to the Income SummarySummary
• Step 2Step 2– Close all accounts that have a debit balance in Close all accounts that have a debit balance in
the Income statement columns to the Income the Income statement columns to the Income summary.summary.
• Step 3Step 3– Close the income summary to the Capital AccountClose the income summary to the Capital Account
• The total in the income summary should equal the net The total in the income summary should equal the net income or loss on the worksheetincome or loss on the worksheet
• Step 4Step 4– Close the Drawing into the Capital AccountClose the Drawing into the Capital Account
Income Summary
Sales
44114411 -0-
4411
Miscellaneous Exp
10
Rent Expense
250
Supplies Expense
2564
Utilities Expense
115
Advertising Exp
273Insurance Exp
100273-0-
100-0-
10-0-
250-0-
2564-0-
115-0-
3312
1099
Barbara Trevino, Cap
1099-0-
1099
Barbara Trevino, Draw
600
General Journal Page 1
Date Account Title Doc No Post Ref Debit Credit
Closing Ent
Aug 31 Sales 4411
Income Summary 4411
31 Income Summary 3312
Advertising Expense 273
Insurance Expense 100
Miscellaneous 10
Rent Expense 50
Supplies Expense 2564
Utilities Expense 115
31 Income Summary 1099
Barbara Trevino, Cap 1099
31 Barbara Trevino, Cap 600
Barbara Trevino, Drawing 600
• Please work “On your Own” on page Please work “On your Own” on page 203 it is the continuation of the last 203 it is the continuation of the last “On Your Own”“On Your Own”
Date Account TitleDoc No
Post Ref Debit Credit
Adjusting Entries
28-Feb Supplies Exp 530 520
Supplies Exp 150 520
28-Feb Insurance Exp 510 300
Prepaid Insurance 160 300
Closing entries
Feb 28
SalesIncome Summary
Income Summary
Keith Altobelli, CapitalIncome Summary
Keith Altobelli, Drawing
Utilities Exp
Supplies Expense
Miscellaneous ExpInsurance Expense
Keith Altobelli, CapitalFeb 28
Feb 28
Feb 28 3196
63476347
300
962
17501750
31513151
1414520
• After we have closed all of the After we have closed all of the temporary accounts, we have to do temporary accounts, we have to do something with all of the permanent something with all of the permanent accounts.accounts.
• We create a financial document that We create a financial document that makes sure that all of our assets, makes sure that all of our assets, liabilities and Owner’s equity are in liabilities and Owner’s equity are in balance.balance.
• All we have to do is take a look at the All we have to do is take a look at the balance sheet section of the balance sheet section of the worksheet and but the numbers on the worksheet and but the numbers on the sheet. sheet.
Encore Music
Post-Closing Trial Balance
August 31, 20xx
Account Title Debit Credit
Cash 8272
Petty Cash 200
Account Rec. - Kids Time 100
Account Rec. - Learn N Play 20
Supplies 2187
Prepaid Insurance 1100
Accounts Pay - Ling Music 1360
Accounts Pay - Sull Off Supp 20
Barbara Trevino, Capital 10499
Beginning Capital$10,000
Net Income$1099
Drawing$600
ProblemsProblems
• 9-1,2,3,49-1,2,3,4• We will also do the computer We will also do the computer
problem together next class, so that problem together next class, so that we know how to do it on the we know how to do it on the computer (kind of redundant isn’t computer (kind of redundant isn’t it?)it?)
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