lesson 16-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 16-1LESSON 16-1

Recording Adjusting Entries

2

LESSON 16-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

ADJUSTING ENTRIES RECORDED ADJUSTING ENTRIES RECORDED FROM A WORK SHEETFROM A WORK SHEET

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page 480

22 11 44 5566 77

1. Heading

2. Date

3. Identify the first adjustment

4. Account debited

5. Debit

6. Account credited

7. Credit

8. Continue down the Adjustments columns

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ADJUSTING ENTRY FOR ALLOWANCE ADJUSTING ENTRY FOR ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTSFOR UNCOLLECTIBLE ACCOUNTS page 482

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ADJUSTING ENTRY FOR ADJUSTING ENTRY FOR MERCHANDISE INVENTORYMERCHANDISE INVENTORY page 482

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ADJUSTING ENTRY FOR SUPPLIESADJUSTING ENTRY FOR SUPPLIES——OFFICEOFFICE page 483

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ADJUSTING ENTRY FOR SUPPLIESADJUSTING ENTRY FOR SUPPLIES——STORESTORE page 483

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ADJUSTING ENTRY FOR ADJUSTING ENTRY FOR PREPAID INSURANCEPREPAID INSURANCE page 484

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ADJUSTING ENTRY FOR DEPRECIATIONADJUSTING ENTRY FOR DEPRECIATION——OFFICE EQUIPMENTOFFICE EQUIPMENT page 484

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ADJUSTING ENTRY FOR DEPRECIATIONADJUSTING ENTRY FOR DEPRECIATION——STORE EQUIPMENTSTORE EQUIPMENT page 485

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ADJUSTING ENTRY FOR FEDERAL ADJUSTING ENTRY FOR FEDERAL INCOME TAXESINCOME TAXES page 485



Recording Closing Entries for Income Statement Accounts

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THE INCOME SUMMARY ACCOUNTTHE INCOME SUMMARY ACCOUNT page 487

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CLOSING ENTRY FOR ACCOUNTS WITH CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCESCREDIT BALANCES

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page 488

3. Debits to close

44

1. Heading

2. Date 4. Credit to Income Summary

3333

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CLOSING ENTRY FOR INCOME STATEMENT CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCESACCOUNTS WITH DEBIT BALANCES

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page 489

3. Credits to close

1. Date

2. Account debited

4. Debit amount

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33

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SUMMARY OF CLOSING ENTRY FOR SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCESDEBIT BALANCES page 490

Bal. 209,960.00 Closing 209,960.00

(New Bal. zero)

Purchases

Adj. (mdse. inv.) 15,840.00 Closing (credit amounts) 500,253.10

Closing (debit accounts) 404,099.15 (New Bal. 80,313.95)

Income Summary

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CLOSING ENTRY TO RECORD CLOSING ENTRY TO RECORD NET INCOMENET INCOME page 491

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33

3. Credit Retained Earnings

1. Date

2. Debit Income Summary

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CLOSING ENTRY FOR DIVIDENDSCLOSING ENTRY FOR DIVIDENDS page 491

3. Credit Dividends

1. Date

2. Debit Retained Earnings

1122

33

18


COMPLETED CLOSING ENTRIES FOR A COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNALCORPORATION RECORDED IN A JOURNAL page 492



Preparing a Post-Closing Trial Balance

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3. Balances of asset accounts

4. Balances contra asset, liability, and capital accounts

POST-CLOSING TRIAL BALANCEPOST-CLOSING TRIAL BALANCE

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66

page 496

7. Double lines

6. Totals

5. Word Totals

2. Accounts that have balances

1. Heading

22

33

44

7755

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ACCOUNTING CYCLE FOR A MERCHANDISING ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATIONBUSINESS ORGANIZED AS A CORPORATION

11

22

33

44

55

page 497

(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.

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ACCOUNTING CYCLE FOR A MERCHANDISING ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATIONBUSINESS ORGANIZED AS A CORPORATION

6. Financial statements are prepared.

page 497

(continued from previous slide)

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99

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.

lesson 16-1

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