Escolar Documentos
Profissional Documentos
Cultura Documentos
5-1
Closing Process
Resets revenue,
expense and Identify accounts for
withdrawal account closing.
balances to zero at
the end of the period.
Record and post closing
Helps summarize a entries.
period’s revenues
and expenses in the
Income Summary
account. Prepare post-closing trial
balance.
Withdrawals
Liabilities
Expenses
Owner’s
Capital
Temporary Permanent
Accounts Accounts
Income
Summary The
Theclosing
closingprocess
process
applies
appliesonly
only to
to
temporary
temporaryaccounts.
accounts.
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
Slide
5-4
10,000 25,000
Income Summary
30,000 5,000
The
Thebalance
balancein
inIncome
Income
30,000 Summary
Summaryequals
equalsnet
net 5,000
income.
income.
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
Slide
5-8
- Withdrawals Account
Owner's Capital
5,000 30,000 5,000 5,000
15,000 Close Withdrawals
account to Owner’s 5,000
-
45,000
40,000
Capital.
Using the
adjusted trial
balance, let’s
prepare the
closing
entries for
FastForward.
Close Revenue
accounts to
Income Summary.
Income Summary
Prepare
Preparethe
theentry
entryto
toclose
closeRevenues
Revenuesbyby
debiting
debitingthe
therevenue
revenueaccounts
accountsand
andcrediting
crediting
Income
IncomeSummary.
Summary.
Income Summary
Income Summary
Consulting Revenue
7,850 7,850
-
Income Summary
7,850
300
Rental Revenue
300 300
-
8,150
Close Expense
accounts to
Income Summary.
Income Summary
GENERAL JOURNAL Page 34
Date Description PR Debit Credit
Prepare
Preparethetheentry
entryto
toclose
closeExpenses
Expensesby
by
crediting
creditingthe
theexpense
expenseaccounts
accountsand
anddebiting
debiting
Income
IncomeSummary.
Summary.
Income Summary
GENERAL JOURNAL Page 34
Date Description PR Debit Credit
Dec. 31 Income Summary 4,365
Depreciation Expense-Equipment 375
Salaries Expense 1,610
Insurance Expense 100
Rent Expense 1,000
Supplies Expense 1,050
Utilities Expense 230
Income Summary
Depreciation
Rent Expense
Expense- Eq.
1,000 1,000
375 375
-
-
Income Summary
375 7,850
1,610 300
Salaries Expense Supplies Expense
100
1,610 1,610 1,050 1,050 1,000
- - 1,050
230
3,785
Insurance Expense Utilities Expense
100 100 230 230
- - Net Income
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
Slide Exh.
5-18 5.3
Close Income
Summary to
Owner’s Capital.
Owner’s Capital
Owner’s Capital
Income Summary
375 7,850
1,610 300
100
Chuck Taylor, 1,000
Capital 1,050
30,000 230
3,785 3,785
-
33,785
Close
Withdrawals to
Owner’s Capital.
Capital
Capital
- 31,185
List
List of
of permanent
permanent
accounts Let’s look at
accounts and
and their
their
FastForward’s
balances
balances after
after post-closing trial
posting
posting closing
closing balance.
entries.
entries.
Total
Total debits
debits and
and
credits
credits must
must be
be
equal.
equal.
Close Dividends
Declared to Retained
Earnings.
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002
Slide
5-27
End of Chapter 5