SlideShare a Scribd company logo

ACCOUNTING CYCLE (2).ppt

Download as PPT, PDF
N
NesriYaya

The document discusses the accounting cycle and closing process. It begins by outlining the steps in the accounting cycle, including analyzing source documents, journalizing transactions, posting to accounts, preparing a trial balance, financial statements, and closing entries. It then discusses the classified balance sheet format which subdivides asset, liability, and equity accounts for more information. Finally, it explains the closing process which involves closing revenue and expense accounts to the income summary account, then closing income summary and dividends to retained earnings to bring beginning balances to zero for the next accounting period.

Marketing
1 of 78
Download to read offline
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
4-1 COMPLETING THE ACCOUNTING CYCLE Training on Accounting Cycle
4-2 Steps in Accounting Cycle Analyze source documents. Journalize transactions in the journal. Post entries to the accounts in the ledger. Prepare a trial balance. Prepare financial statements. Do post-closing trial balance Journalize and post closing entries Journalize and post adjusting entries 134
4-3 Expanded Accounting Equation ASSETS + EXP. = LIAB. + S/H EQUITY + REV. A + E = L + S/E + R Dr. Cr. + - Bal. Dr. Cr. + - Bal. Permanent Temporary Permanent Permanent Temporary
4-4 Each revenue and expense must have a $0 balance at the beginning of the next year. Each revenue and expense account normally has a balance at year-end. How do we get the revenues and expenses to $0 balances for the beginning of the next year? A Norm, a Rule and a Question
4-5 The Work Sheet  It is a columnar spreadsheet for summarizing information needed to adjust and close the books.  It is only an accounting tool and not part of the formal accounting records.  When completed, information for preparing financial statements can be taken directly from the Work Sheet.
4-6 The Work Sheet The work sheet format is illustrated below: COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit
4-7 COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit The Work Sheet The information in these columns comes from the general ledger. The work sheet format is illustrated below:
4-8 COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit The Work Sheet The adjustments are entered initially here and are journalized and posted later. The work sheet format is illustrated below:
4-9 COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit The Work Sheet This information is determined mathematically from the previous two sets of columns. The work sheet format is illustrated below:
4-10 The Work Sheet There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B
4-11 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet The Income Statement columns are used to facilitate preparation of the formal Income Statement.
4-12 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet The Statement of Retained Earnings columns are used to facilitate preparation of the formal Statement of Retained Earnings.
4-13 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet The Balance Sheet columns are used to facilitate preparation of the formal Balance Sheet.
4-14 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet Are work sheets used when accounting is computerized?
4-15 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet Are work sheets used when accounting is computerized? (Listen for the answer on the video.)
4-16 Accounting Systems: Manual to Computerized 144 to 148
4-17 Let’s move on to a discussion of the Classified Balance Sheet.
4-18 Classified Balance Sheet  Contains the same three major categories as before:  Assets  Liabilities  Stockholders’ Equity  However, the major categories are subdivided to provide more useful information.
4-19 Classified Balance Sheet Subdivisions of Assets  Current Assets  Property, Plant, and Equipment  Long-Term Investments  Intangibles
4-20 Cash and other assets that a business can convert to cash or use up within one year (or one operating cycle, whichever is longer). Classified Balance Sheet Current Assets Cash Accounts Receivable Inventory Prepaid Expenses Short-term Investments Examples ? Shown in what order on the Balance Sheet?
4-21 Assets with useful lives of more than one year acquired for use in the business rather than for resale. Classified Balance Sheet Property, Plant & Equipment Land Natural Resources Buildings Equipment Leasehold Improvements Examples ? Alternative, informal term used for Property, Plant & Equipment? “Fixed Assets”
4-22 Classified Balance Sheet Long-Term Investments Consists of securities of another company held with the intention of holding the securities for more than one year.
4-23 Rights or economic benefits that are not physical in nature. Classified Balance Sheet Intangible Assets Patents Goodwill Copyrights Trademarks Examples ?
4-24 ASSETS Current Assets Cash 75,000 $ Accounts Receivable (net) 100,000 Merchandise Inventories 80,000 Total Current Assets 255,000 $ Property and Equipment Land 200,000 $ Buildings 300,000 Less: Accumulated Depreciation (150,000) Net Property and Equipment 350,000 $ Investment in Other Company 250,000 Patents 10,000 Total Assets 865,000 $ Classified Balance Sheet Assets Section Example Similar p.149
4-25  Current Liabilities  Long-Term Liabilities Classified Balance Sheet Liabilities
4-26 Debts due within one year (or one operating cycle, whichever is longer). Usually paid with current assets. Classified Balance Sheet Current Liabilities Wages Payable Taxes Payable Unearned Revenues Short-term Notes Payable Accounts Payable Examples ? Shown in what order on the Balance Sheet? (p. 152)
4-27 Debts that are due more than one year after the Balance Sheet date. Due dates should appear on the Balance Sheet. Mortgages Payable Bonds Payable Long-term Notes Payable Classified Balance Sheet Long-Term Liabilities Examples ?
4-28 LIABILITIES Current Liabilities Accounts Payable 125,000 $ Unearned Revenues 1,000 Wages Payable 10,000 Total Current Liabilities 136,000 $ Long-Term Liabilities Notes Payable (Due 12/31/99) 90,000 $ Bonds Payable (Due 12/31/2021) 200,000 Total Long-Term Liabilities 290,000 $ Total Liabilities 426,000 $ Classified Balance Sheet Liabilities Section Example Similar p.149
4-29  Paid-In Capital  Amounts paid into the company by the owners as investments.  Includes: Common Stock and Preferred Stock.  Retained Earnings  The cumulative income of the company since its inception less the amounts distributed to the owners in the form of dividends since its inception. Classified Balance Sheet Stockholders’ Equity
4-30 STOCKHOLDERS' EQUITY Common Stock 300,000 $ Additional Paid-In Capital 95,000 Retained Earnings 44,000 Total Stockholders' Equity 439,000 $ Classified Balance Sheet Stockholders’ Equity Section Example Similar p.149
4-31  Transferring (“pouring”) the balances in revenue and expense accounts into the Income Summary account.  Transferring the balance in Income Summary to Retained Earnings.  Transferring the balance in the Dividends account to Retained Earnings. The Closing Process .
4-32 The Closing Process Close Revenues Close Expenses
4-33 The Closing Process
4-34 Income Summary Temporary account Exists only during the closing process Does not appear on any financial statement The Closing Process Close Income Summary
4-35 The Closing Process
4-36 The Closing Process Close Dividends Summary of Steps Close Revenues to Income Summary Close Expenses to Income Summary Close Income Summary to Retained Earnings Close Dividends to Retained Earnings
4-37 Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year Revenues have a normal balance on the credit side. Revenues 25,000 Closing Journal Entries T- Account Example
4-38 Revenues 25,000 How do we bring Revenues to a $0 balance? Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
4-39 Remember: To reduce a credit balance account, debit the account. Revenues 25,000 How do we bring Revenues to a $0 balance? Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
4-40 Revenues 25,000 We need to debit the account for $25,000 to reduce the account to $0. How do we bring Revenues to a $0 balance? Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
4-41 Revenues 25,000 We need to debit the account for $25,000 to reduce the account to $0. 0 How do we bring Revenues to a $0 balance? 25,000 Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
4-42  In the previous example, a $25,000 debit was made to close out Revenues.  A corresponding $25,000 credit must be made to Income Summary. Income Summary Revenues 25,000 0 25,000 Closing Journal Entries T- Account Example
4-43  In the previous example, a $25,000 debit was made to close out Revenues.  A corresponding $25,000 credit must be made to Income Summary. Revenues 25,000 0 Income Summary 25,000 25,000 Closing Journal Entries T- Account Example
4-44 Closing Journal Entries use the same format as other journal entries: GENERAL JOURNAL Page: 1 Date Description PR Debit Credit MM/DD Account Name ### $$$ Account Name ### $$$ To record closing entry Closing Journal Entries General Journal Example
4-45 Closing Journal Entries General Journal Example GENERAL JOURNAL Page: 97 Date Description PR Debit Credit On 12/31/99, Revenues has a $25,000 balance at year-end. Prepare the journal entry to close the account.
4-46 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 25,000 Income Summary 25,000 to close Revenues Closing Journal Entries General Journal Example On 12/31/99, Revenues has a $25,000 balance at year-end. Prepare the journal entry to close the account.
4-47 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 25,000 Income Summary 25,000 to close Revenues Post the entry to the Revenue account. ACCOUNT NAME: REVENUES ACCOUNT No. 400 Date Description PR Debit Credit Balance End of Year Balance 25,000 25,000 Closing Journal Entries General Journal Example
4-48 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 400 25,000 Income Summary 25,000 to close Revenues Post the entry to the Revenue account. ACCOUNT NAME: REVENUES ACCOUNT No. 400 Date Description PR Debit Credit Balance End of Year Balance 25,000 25,000 31-DecClose to Income Summary G97 25,000 0 Closing Journal Entries General Journal Example
4-49 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 400 25,000 Income Summary 600 25,000 to close Revenues ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 Closing Journal Entries General Journal Example Also, post to the Income Summary account.
4-50 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit Closing Journal Entries General Journal Example On 12/31/99, Rent Expense was $8,000 and Salaries Expense was $15,000. Prepare the closing journal entry.
4-51 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Income Summary 23,000 Rent Expense 8,000 Salaries Expense 15,000 to close expenses Closing Journal Entries General Journal Example On 12/31/99, Rent Expense was $8,000 and Salaries Expense was $15,000. Prepare the closing journal entry.
4-52 ACCOUNT NAME: RENT EXPENSE ACCOUNT No. 515 Date Description PR Debit Credit Balance 31-DecBalance 8,000 8,000 31-DecIncome Summary G97 8,000 0 Closing Journal Entries General Journal Example After posting, the Rent Expense and Salaries Expense accounts have $0 balances. ACCOUNT NAME: SALARIES EXPENSE ACCOUNT No. 507 Date Description PR Debit Credit Balance 31-DecBalance 15,000 15,000 31-DecIncome Summary G97 15,000 0
4-53 Closing Journal Entries General Journal Example ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 31-DecTo close Expenses G97 23,000 2,000 Page: GENERAL JOURNAL Page: 97 Date Description PR Debit Credit After posting, the Income Summary account has a $2,000 balance that must be closed to Retained Earnings.
4-54 Closing Journal Entries General Journal Example ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 31-DecTo close Expenses G97 23,000 2,000 Page: 97 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Income Summary 600 2,000 Retained Earnings 2,000 After posting, the Income Summary account has a $2,000 balance that must be closed to Retained Earnings.
4-55 Closing Journal Entries General Journal Example ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 31-DecTo close Expenses G97 23,000 2,000 31-DecTo close R/E G97 2,000 0 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Income Summary 600 2,000 Retained Earnings 2,000 After posting, the Income Summary account has a $2,000 balance that must be closed to Retained Earnings.
4-56 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit Closing Journal Entries General Journal Example On 12/31/99, the Dividends account has a $1,300 balance. Prepare the closing entry.
4-57 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Retained Earnings 1,300 Dividends 1,300 to close dividends Closing Journal Entries General Journal Example On 12/31/99, the Dividends account has a $1,300 balance. Prepare the closing entry.
4-58 Closing Journal Entries General Journal Example Assuming Retained Earnings had a pre-closing ending balance of $7,000, ... ACCOUNT NAME: Retained Earnings ACCOUNT No. 310 Date Description PR Debit Credit Balance 31-Dec Balance 7,000 7,000 31-Dec To close Income Summary G97 2,000 9,000 31-Dec To close Dividends G97 1,300 7,700 … after posting the closing of the Income Summary and Dividends accounts, the ending balance is $7,700.
4-59 Income Summary Expenses Revenues 7,000 Beg. bal. Overview of accounts affected. Retained Earnings Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-60 Income Summary Expenses Revenues Owner’s Capital $ 7,000 Once more, close out Revenues with a debit to Revenues and a credit to Income Summary. Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-61 Income Summary Expenses Revenues $ 7,000 Owner’s Capital 25,000 Once more, close out Revenues with a debit to Revenues and a credit to Income Summary. 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-62 Income Summary Expenses Revenues $ 7,000 Owner’s Capital 25,000 In effect, you have “poured” the Revenues credit balance into the Income Summary. 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-63 Income Summary Expenses Revenues 25,000 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! Close out Expenses with a credit to Expenses and a debit to Income Summary.
4-64 Income Summary Expenses Revenues 25,000 $ 7,000 Owner’s Capital 25,000 Close out Expenses with a credit to Expenses and a debit to Income Summary. Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! 18,100 18,100
4-65 Income Summary Expenses Revenues $ 7,000 Owner’s Capital 25,000 25,000 18,100 18,100 Bal. 18,100 25,000 Bal. In effect, you have “poured” the Expenses debit balance into the Income Summary. Closing Journal Entries Once More!
4-66 Income Summary Expenses Revenues $ 7,000 Owner’s Capital Determine the ending balance in Income Summary. 25,000 25,000 18,100 18,100 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-67 Income Summary Expenses Revenues $ 7,000 Owner’s Capital Determine the ending balance in Income Summary. 25,000 25,000 18,100 18,100 6,900 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-68 Income Summary Expenses Revenues 7,000 Beg. bal. 25,000 25,000 18,100 18,100 6,900 bal. Then, close Income Summary to Retained Earnings. Retained Earnings Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-69 Income Summary Expenses Revenues $ 25,000 6,900 25,000 25,000 18,100 18,100 6,900 Retained Earnings 6,900 bal. 7,000 Beg. bal. Then, close Income Summary to Retained Earnings. Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
4-70 Income Summary Expenses Revenues 25,000 18,100 18,100 6,900 Retained Earnings 6,900 bal. 7,000 Beg. bal. 25,000 The $6,900 credit to Retained Earnings represents what? Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! 6,900
4-71 Income Summary Expenses Revenues 25,000 18,100 18,100 6,900 Retained Earnings 6,900 bal. 7,000 Beg. bal. 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! Net Income! 6,900
4-72 7,000 B. bal. 6,900 N.I. Dividends 2,000 Retained Earnings  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
4-73 2,000 Close Dividends with a credit to Dividends and a debit to Retained Earnings. Dividends Retained Earnings 7,000 B. bal. 6,900 N.I.  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
4-74 2,000 2,000 2,000 Dividends Retained Earnings 7,000 B. bal. 6,900 N.I. Close Dividends with a credit to Dividends and a debit to Retained Earnings.  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
4-75 2,000 2,000 Div. 2,000 Determine the ending balance in Retained Earnings. Dividends Retained Earnings 7,000 B. bal. 6,900 N.I.  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
4-76 2,000 2,000 11,900 E. bal. Dividends Retained Earnings 7,000 B. bal. 6,900 N.I. Determine the ending balance in Retained Earnings. Div. 2,000  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
4-77 A = L + SE 865,000 = 426,000 + 439,000 Classified Balance Sheet Stockholders’ Equity Section Example STOCKHOLDERS' EQUITY Common Stock 300,000 $ Additional Paid-In Capital 95,000 Retained Earnings 44,000 Total Stockholders' Equity 439,000 $
4-78 THANK YOU VERY MUCH Wrap Up

More Related Content

PPT
Financial_Statement_Preparation (1).ppt
seyonsithamparanatha1
 
PPT
chapter_04.ppt
Dr. Ahmed Hassan, PhD, DBA, PMP
 
PPT
Chapter 3.power point presentation income
teklaykibrom3
 
PPT
Financial Statement Preparation (2)
hampath11
 
PPT
Financial statement preparation
Jerome Pratt
 
PPT
Financial statement preparation
Jerome Pratt
 
PPT
Financial Accouting - Chapter 1 PowerPoint
duckling0409
 
PPT
Kieso_Inter_Ch04_IFRS.ppt
DipoTriMartiano
 
Financial_Statement_Preparation (1).ppt
seyonsithamparanatha1
 
chapter_04.ppt
Dr. Ahmed Hassan, PhD, DBA, PMP
 
Chapter 3.power point presentation income
teklaykibrom3
 
Financial Statement Preparation (2)
hampath11
 
Financial statement preparation
Jerome Pratt
 
Financial statement preparation
Jerome Pratt
 
Financial Accouting - Chapter 1 PowerPoint
duckling0409
 
Kieso_Inter_Ch04_IFRS.ppt
DipoTriMartiano
 

Similar to ACCOUNTING CYCLE (2).ppt (20)

PPT
Chapter_4_Slide_ppt_Interuuhhhhhhmediate_Account.ppt
LassaadBenMahjoub
 
PPT
CH-4.ppt
BcsStudy1
 
PDF
Essential Finance & Accounting for Management Consultants and Business Analysts
Asen Gyczew
 
PPTX
financialaccounting-181027075922.pptx_20241118_144233_g0000.pptx
siddhesshthakurr
 
PPT
Preparation Financial Statement.ppt
Mohamoud9
 
PPT
Chapter_4_ppt_Intermediate_Account.ppt
gizachewaleka
 
PPT
Training on Financial Accounting Part II.ppt
NesriYaya
 
PPTX
Share _Ch_04_Completing the Accounting Cycle (Edited).ppt.pptx
SarahTasinShams
 
PPTX
Ch04
ESHETIE MEKONENE AMARE
 
PPTX
Ch04
Baadai Badral
 
PPTX
Final Accounts
PrachiSharma304
 
PPSX
New accountingbasicspart1
David Marshall
 
PPTX
Income Statement and related information
RizkikaAzizah
 
PPT
Chapter 8 the six column work sheet
Iva Walton
 
PPTX
Completing the accounting cycle - Chapter four Accounting principles
Reema975562
 
PPTX
SINGLE ENTRY _INCOMPLETE RECORDS_.pptx
ssuser6441681
 
PPTX
201 lec01
Abdul Jalal
 
PPTX
Accounting Principles, 12th ch4
AbdelmonsifFadl
 
PPT
Financial Statement Analysis
GAURAV GUPTA
 
PPT
482826899-ch04-ppt-Income-Statement-and-Related-Information-ppt.ppt
mustafe44
 
Chapter_4_Slide_ppt_Interuuhhhhhhmediate_Account.ppt
LassaadBenMahjoub
 
CH-4.ppt
BcsStudy1
 
Essential Finance & Accounting for Management Consultants and Business Analysts
Asen Gyczew
 
financialaccounting-181027075922.pptx_20241118_144233_g0000.pptx
siddhesshthakurr
 
Preparation Financial Statement.ppt
Mohamoud9
 
Chapter_4_ppt_Intermediate_Account.ppt
gizachewaleka
 
Training on Financial Accounting Part II.ppt
NesriYaya
 
Share _Ch_04_Completing the Accounting Cycle (Edited).ppt.pptx
SarahTasinShams
 
Ch04
ESHETIE MEKONENE AMARE
 
Ch04
Baadai Badral
 
Final Accounts
PrachiSharma304
 
New accountingbasicspart1
David Marshall
 
Income Statement and related information
RizkikaAzizah
 
Chapter 8 the six column work sheet
Iva Walton
 
Completing the accounting cycle - Chapter four Accounting principles
Reema975562
 
SINGLE ENTRY _INCOMPLETE RECORDS_.pptx
ssuser6441681
 
201 lec01
Abdul Jalal
 
Accounting Principles, 12th ch4
AbdelmonsifFadl
 
Financial Statement Analysis
GAURAV GUPTA
 
482826899-ch04-ppt-Income-Statement-and-Related-Information-ppt.ppt
mustafe44
 
Ad

More from NesriYaya (12)

PPTX
CARE AND MAINTENANCE.pptx
NesriYaya
 
PPTX
TERRAIN, LANDSCAPE.pptx
NesriYaya
 
DOCX
Youth Forum Project BP.docx
NesriYaya
 
PDF
tdinf70_en.pdf
NesriYaya
 
DOCX
Objective & Organization List - Copy.docx
NesriYaya
 
DOCX
DESIGN_AND_FABRICATION_OF_MOTORIZED_SCRE.docx
NesriYaya
 
PPT
Institutional Capacity buildingF.ppt
NesriYaya
 
PPT
PPP Innovation, IL & TT.ppt
NesriYaya
 
PPT
PPT Community Eng. 7 & SCD.ppt
NesriYaya
 
PPTX
PM PPT for Dire Dawa Poly.pptx
NesriYaya
 
PPT
petty cah training.ppt
NesriYaya
 
PPT
Training on Financial Accounting Part I.ppt
NesriYaya
 
CARE AND MAINTENANCE.pptx
NesriYaya
 
TERRAIN, LANDSCAPE.pptx
NesriYaya
 
Youth Forum Project BP.docx
NesriYaya
 
tdinf70_en.pdf
NesriYaya
 
Objective & Organization List - Copy.docx
NesriYaya
 
DESIGN_AND_FABRICATION_OF_MOTORIZED_SCRE.docx
NesriYaya
 
Institutional Capacity buildingF.ppt
NesriYaya
 
PPP Innovation, IL & TT.ppt
NesriYaya
 
PPT Community Eng. 7 & SCD.ppt
NesriYaya
 
PM PPT for Dire Dawa Poly.pptx
NesriYaya
 
petty cah training.ppt
NesriYaya
 
Training on Financial Accounting Part I.ppt
NesriYaya
 
Ad

Recently uploaded (20)

PDF
Keshav Solutions Pest Control || Trending Branding Digital Solutions
Pratibha Singh
 
PPTX
UNIT 3 - 5 INDUSTRIAL PRICING.ppt x
simransahu30
 
PDF
Wondershare Filmora Crack Free Download 2025
malikyahyah1122
 
PDF
5 free to use google tools to understand your customers online behavior in 20...
content90
 
PPTX
hnk joint business plan for_Rooftop_Plan
mymyinboxx
 
PPTX
Tea and different types of tea in India
PrachiMor3
 
PDF
Boost Sales Around the Clock with AI Chatbots for Marketing
Warner Biron
 
PDF
Digital Marketing - clear pictire of marketing
mankalharshitha
 
PPTX
"Best Healthcare Digital Marketing Ideas
businexperts1
 
PDF
UNIT 1 -3 Factors Influencing RURAL CONSUMER BEHAVIOUR.pdf
simransahu30
 
PDF
Nurpet Packaging Company Profile (Basic)
Emre Çolakoğlu
 
PPTX
Fixing-AI-Hallucinations-The-NeuroRanktm-Approach.pptx
StratEdgyByPulpStrat
 
PDF
UNIT 1 -4 Profile of Rural Consumers (1).pdf
simransahu30
 
PPTX
Your score increases as you pick a category, fill out a long description and ...
Henry Jameson
 
PDF
20K Btc Enabled Cash App Accounts – Safe, Fast, Verified.pdf
BestPlacestoBuyVerif
 
PDF
Building a strong social media presence.
mpjumana7
 
PDF
exceptionalinsights.group visitor traffic statistics 08-08-25
Mike Hydes
 
PDF
Mastering Content Strategy in 2025 ss.pdf
hassansheikhxpro
 
PPTX
Strategic Sage Digital-The Professional Digital Marketing Company in Mohali.pptx
strategicsagedigital
 
PDF
Best digital marketing company in Mumbai
panderohit557
 
Keshav Solutions Pest Control || Trending Branding Digital Solutions
Pratibha Singh
 
UNIT 3 - 5 INDUSTRIAL PRICING.ppt x
simransahu30
 
Wondershare Filmora Crack Free Download 2025
malikyahyah1122
 
5 free to use google tools to understand your customers online behavior in 20...
content90
 
hnk joint business plan for_Rooftop_Plan
mymyinboxx
 
Tea and different types of tea in India
PrachiMor3
 
Boost Sales Around the Clock with AI Chatbots for Marketing
Warner Biron
 
Digital Marketing - clear pictire of marketing
mankalharshitha
 
"Best Healthcare Digital Marketing Ideas
businexperts1
 
UNIT 1 -3 Factors Influencing RURAL CONSUMER BEHAVIOUR.pdf
simransahu30
 
Nurpet Packaging Company Profile (Basic)
Emre Çolakoğlu
 
Fixing-AI-Hallucinations-The-NeuroRanktm-Approach.pptx
StratEdgyByPulpStrat
 
UNIT 1 -4 Profile of Rural Consumers (1).pdf
simransahu30
 
Your score increases as you pick a category, fill out a long description and ...
Henry Jameson
 
20K Btc Enabled Cash App Accounts – Safe, Fast, Verified.pdf
BestPlacestoBuyVerif
 
Building a strong social media presence.
mpjumana7
 
exceptionalinsights.group visitor traffic statistics 08-08-25
Mike Hydes
 
Mastering Content Strategy in 2025 ss.pdf
hassansheikhxpro
 
Strategic Sage Digital-The Professional Digital Marketing Company in Mohali.pptx
strategicsagedigital
 
Best digital marketing company in Mumbai
panderohit557
 

ACCOUNTING CYCLE (2).ppt

  • 2. 4-2 Steps in Accounting Cycle Analyze source documents. Journalize transactions in the journal. Post entries to the accounts in the ledger. Prepare a trial balance. Prepare financial statements. Do post-closing trial balance Journalize and post closing entries Journalize and post adjusting entries 134
  • 3. 4-3 Expanded Accounting Equation ASSETS + EXP. = LIAB. + S/H EQUITY + REV. A + E = L + S/E + R Dr. Cr. + - Bal. Dr. Cr. + - Bal. Permanent Temporary Permanent Permanent Temporary
  • 4. 4-4 Each revenue and expense must have a $0 balance at the beginning of the next year. Each revenue and expense account normally has a balance at year-end. How do we get the revenues and expenses to $0 balances for the beginning of the next year? A Norm, a Rule and a Question
  • 5. 4-5 The Work Sheet  It is a columnar spreadsheet for summarizing information needed to adjust and close the books.  It is only an accounting tool and not part of the formal accounting records.  When completed, information for preparing financial statements can be taken directly from the Work Sheet.
  • 6. 4-6 The Work Sheet The work sheet format is illustrated below: COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit
  • 7. 4-7 COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit The Work Sheet The information in these columns comes from the general ledger. The work sheet format is illustrated below:
  • 8. 4-8 COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit The Work Sheet The adjustments are entered initially here and are journalized and posted later. The work sheet format is illustrated below:
  • 9. 4-9 COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Account Title Trial Balance Adjustments Adjusted T/B Debit Credit Debit Credit Debit Credit The Work Sheet This information is determined mathematically from the previous two sets of columns. The work sheet format is illustrated below:
  • 10. 4-10 The Work Sheet There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B
  • 11. 4-11 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet The Income Statement columns are used to facilitate preparation of the formal Income Statement.
  • 12. 4-12 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet The Statement of Retained Earnings columns are used to facilitate preparation of the formal Statement of Retained Earnings.
  • 13. 4-13 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet The Balance Sheet columns are used to facilitate preparation of the formal Balance Sheet.
  • 14. 4-14 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet Are work sheets used when accounting is computerized?
  • 15. 4-15 There are three additional sets of columns that are normally present on the work sheet for a corporation. COMPANY NAME Work Sheet For the Year Ended December 31, 1999 Income Stmt Stmt of R/E Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Adjusted T/B The Work Sheet Are work sheets used when accounting is computerized? (Listen for the answer on the video.)
  • 16. 4-16 Accounting Systems: Manual to Computerized 144 to 148
  • 17. 4-17 Let’s move on to a discussion of the Classified Balance Sheet.
  • 18. 4-18 Classified Balance Sheet  Contains the same three major categories as before:  Assets  Liabilities  Stockholders’ Equity  However, the major categories are subdivided to provide more useful information.
  • 19. 4-19 Classified Balance Sheet Subdivisions of Assets  Current Assets  Property, Plant, and Equipment  Long-Term Investments  Intangibles
  • 20. 4-20 Cash and other assets that a business can convert to cash or use up within one year (or one operating cycle, whichever is longer). Classified Balance Sheet Current Assets Cash Accounts Receivable Inventory Prepaid Expenses Short-term Investments Examples ? Shown in what order on the Balance Sheet?
  • 21. 4-21 Assets with useful lives of more than one year acquired for use in the business rather than for resale. Classified Balance Sheet Property, Plant & Equipment Land Natural Resources Buildings Equipment Leasehold Improvements Examples ? Alternative, informal term used for Property, Plant & Equipment? “Fixed Assets”
  • 22. 4-22 Classified Balance Sheet Long-Term Investments Consists of securities of another company held with the intention of holding the securities for more than one year.
  • 23. 4-23 Rights or economic benefits that are not physical in nature. Classified Balance Sheet Intangible Assets Patents Goodwill Copyrights Trademarks Examples ?
  • 24. 4-24 ASSETS Current Assets Cash 75,000 $ Accounts Receivable (net) 100,000 Merchandise Inventories 80,000 Total Current Assets 255,000 $ Property and Equipment Land 200,000 $ Buildings 300,000 Less: Accumulated Depreciation (150,000) Net Property and Equipment 350,000 $ Investment in Other Company 250,000 Patents 10,000 Total Assets 865,000 $ Classified Balance Sheet Assets Section Example Similar p.149
  • 25. 4-25  Current Liabilities  Long-Term Liabilities Classified Balance Sheet Liabilities
  • 26. 4-26 Debts due within one year (or one operating cycle, whichever is longer). Usually paid with current assets. Classified Balance Sheet Current Liabilities Wages Payable Taxes Payable Unearned Revenues Short-term Notes Payable Accounts Payable Examples ? Shown in what order on the Balance Sheet? (p. 152)
  • 27. 4-27 Debts that are due more than one year after the Balance Sheet date. Due dates should appear on the Balance Sheet. Mortgages Payable Bonds Payable Long-term Notes Payable Classified Balance Sheet Long-Term Liabilities Examples ?
  • 28. 4-28 LIABILITIES Current Liabilities Accounts Payable 125,000 $ Unearned Revenues 1,000 Wages Payable 10,000 Total Current Liabilities 136,000 $ Long-Term Liabilities Notes Payable (Due 12/31/99) 90,000 $ Bonds Payable (Due 12/31/2021) 200,000 Total Long-Term Liabilities 290,000 $ Total Liabilities 426,000 $ Classified Balance Sheet Liabilities Section Example Similar p.149
  • 29. 4-29  Paid-In Capital  Amounts paid into the company by the owners as investments.  Includes: Common Stock and Preferred Stock.  Retained Earnings  The cumulative income of the company since its inception less the amounts distributed to the owners in the form of dividends since its inception. Classified Balance Sheet Stockholders’ Equity
  • 30. 4-30 STOCKHOLDERS' EQUITY Common Stock 300,000 $ Additional Paid-In Capital 95,000 Retained Earnings 44,000 Total Stockholders' Equity 439,000 $ Classified Balance Sheet Stockholders’ Equity Section Example Similar p.149
  • 31. 4-31  Transferring (“pouring”) the balances in revenue and expense accounts into the Income Summary account.  Transferring the balance in Income Summary to Retained Earnings.  Transferring the balance in the Dividends account to Retained Earnings. The Closing Process .
  • 34. 4-34 Income Summary Temporary account Exists only during the closing process Does not appear on any financial statement The Closing Process Close Income Summary
  • 36. 4-36 The Closing Process Close Dividends Summary of Steps Close Revenues to Income Summary Close Expenses to Income Summary Close Income Summary to Retained Earnings Close Dividends to Retained Earnings
  • 37. 4-37 Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year Revenues have a normal balance on the credit side. Revenues 25,000 Closing Journal Entries T- Account Example
  • 38. 4-38 Revenues 25,000 How do we bring Revenues to a $0 balance? Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
  • 39. 4-39 Remember: To reduce a credit balance account, debit the account. Revenues 25,000 How do we bring Revenues to a $0 balance? Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
  • 40. 4-40 Revenues 25,000 We need to debit the account for $25,000 to reduce the account to $0. How do we bring Revenues to a $0 balance? Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
  • 41. 4-41 Revenues 25,000 We need to debit the account for $25,000 to reduce the account to $0. 0 How do we bring Revenues to a $0 balance? 25,000 Closing Journal Entries T- Account Example Used to bring revenue and expense accounts to $0 balances for the start of the next fiscal year
  • 42. 4-42  In the previous example, a $25,000 debit was made to close out Revenues.  A corresponding $25,000 credit must be made to Income Summary. Income Summary Revenues 25,000 0 25,000 Closing Journal Entries T- Account Example
  • 43. 4-43  In the previous example, a $25,000 debit was made to close out Revenues.  A corresponding $25,000 credit must be made to Income Summary. Revenues 25,000 0 Income Summary 25,000 25,000 Closing Journal Entries T- Account Example
  • 44. 4-44 Closing Journal Entries use the same format as other journal entries: GENERAL JOURNAL Page: 1 Date Description PR Debit Credit MM/DD Account Name ### $$$ Account Name ### $$$ To record closing entry Closing Journal Entries General Journal Example
  • 45. 4-45 Closing Journal Entries General Journal Example GENERAL JOURNAL Page: 97 Date Description PR Debit Credit On 12/31/99, Revenues has a $25,000 balance at year-end. Prepare the journal entry to close the account.
  • 46. 4-46 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 25,000 Income Summary 25,000 to close Revenues Closing Journal Entries General Journal Example On 12/31/99, Revenues has a $25,000 balance at year-end. Prepare the journal entry to close the account.
  • 47. 4-47 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 25,000 Income Summary 25,000 to close Revenues Post the entry to the Revenue account. ACCOUNT NAME: REVENUES ACCOUNT No. 400 Date Description PR Debit Credit Balance End of Year Balance 25,000 25,000 Closing Journal Entries General Journal Example
  • 48. 4-48 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 400 25,000 Income Summary 25,000 to close Revenues Post the entry to the Revenue account. ACCOUNT NAME: REVENUES ACCOUNT No. 400 Date Description PR Debit Credit Balance End of Year Balance 25,000 25,000 31-DecClose to Income Summary G97 25,000 0 Closing Journal Entries General Journal Example
  • 49. 4-49 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Revenues 400 25,000 Income Summary 600 25,000 to close Revenues ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 Closing Journal Entries General Journal Example Also, post to the Income Summary account.
  • 50. 4-50 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit Closing Journal Entries General Journal Example On 12/31/99, Rent Expense was $8,000 and Salaries Expense was $15,000. Prepare the closing journal entry.
  • 51. 4-51 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Income Summary 23,000 Rent Expense 8,000 Salaries Expense 15,000 to close expenses Closing Journal Entries General Journal Example On 12/31/99, Rent Expense was $8,000 and Salaries Expense was $15,000. Prepare the closing journal entry.
  • 52. 4-52 ACCOUNT NAME: RENT EXPENSE ACCOUNT No. 515 Date Description PR Debit Credit Balance 31-DecBalance 8,000 8,000 31-DecIncome Summary G97 8,000 0 Closing Journal Entries General Journal Example After posting, the Rent Expense and Salaries Expense accounts have $0 balances. ACCOUNT NAME: SALARIES EXPENSE ACCOUNT No. 507 Date Description PR Debit Credit Balance 31-DecBalance 15,000 15,000 31-DecIncome Summary G97 15,000 0
  • 53. 4-53 Closing Journal Entries General Journal Example ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 31-DecTo close Expenses G97 23,000 2,000 Page: GENERAL JOURNAL Page: 97 Date Description PR Debit Credit After posting, the Income Summary account has a $2,000 balance that must be closed to Retained Earnings.
  • 54. 4-54 Closing Journal Entries General Journal Example ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 31-DecTo close Expenses G97 23,000 2,000 Page: 97 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Income Summary 600 2,000 Retained Earnings 2,000 After posting, the Income Summary account has a $2,000 balance that must be closed to Retained Earnings.
  • 55. 4-55 Closing Journal Entries General Journal Example ACCOUNT NAME: INCOME SUMMARY ACCOUNT No. 600 Date Description PR Debit Credit Balance 31-DecTo close Revenues G97 25,000 25,000 31-DecTo close Expenses G97 23,000 2,000 31-DecTo close R/E G97 2,000 0 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Income Summary 600 2,000 Retained Earnings 2,000 After posting, the Income Summary account has a $2,000 balance that must be closed to Retained Earnings.
  • 56. 4-56 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit Closing Journal Entries General Journal Example On 12/31/99, the Dividends account has a $1,300 balance. Prepare the closing entry.
  • 57. 4-57 GENERAL JOURNAL Page: 97 Date Description PR Debit Credit 31-Dec Retained Earnings 1,300 Dividends 1,300 to close dividends Closing Journal Entries General Journal Example On 12/31/99, the Dividends account has a $1,300 balance. Prepare the closing entry.
  • 58. 4-58 Closing Journal Entries General Journal Example Assuming Retained Earnings had a pre-closing ending balance of $7,000, ... ACCOUNT NAME: Retained Earnings ACCOUNT No. 310 Date Description PR Debit Credit Balance 31-Dec Balance 7,000 7,000 31-Dec To close Income Summary G97 2,000 9,000 31-Dec To close Dividends G97 1,300 7,700 … after posting the closing of the Income Summary and Dividends accounts, the ending balance is $7,700.
  • 59. 4-59 Income Summary Expenses Revenues 7,000 Beg. bal. Overview of accounts affected. Retained Earnings Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 60. 4-60 Income Summary Expenses Revenues Owner’s Capital $ 7,000 Once more, close out Revenues with a debit to Revenues and a credit to Income Summary. Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 61. 4-61 Income Summary Expenses Revenues $ 7,000 Owner’s Capital 25,000 Once more, close out Revenues with a debit to Revenues and a credit to Income Summary. 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 62. 4-62 Income Summary Expenses Revenues $ 7,000 Owner’s Capital 25,000 In effect, you have “poured” the Revenues credit balance into the Income Summary. 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 63. 4-63 Income Summary Expenses Revenues 25,000 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! Close out Expenses with a credit to Expenses and a debit to Income Summary.
  • 64. 4-64 Income Summary Expenses Revenues 25,000 $ 7,000 Owner’s Capital 25,000 Close out Expenses with a credit to Expenses and a debit to Income Summary. Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! 18,100 18,100
  • 65. 4-65 Income Summary Expenses Revenues $ 7,000 Owner’s Capital 25,000 25,000 18,100 18,100 Bal. 18,100 25,000 Bal. In effect, you have “poured” the Expenses debit balance into the Income Summary. Closing Journal Entries Once More!
  • 66. 4-66 Income Summary Expenses Revenues $ 7,000 Owner’s Capital Determine the ending balance in Income Summary. 25,000 25,000 18,100 18,100 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 67. 4-67 Income Summary Expenses Revenues $ 7,000 Owner’s Capital Determine the ending balance in Income Summary. 25,000 25,000 18,100 18,100 6,900 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 68. 4-68 Income Summary Expenses Revenues 7,000 Beg. bal. 25,000 25,000 18,100 18,100 6,900 bal. Then, close Income Summary to Retained Earnings. Retained Earnings Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 69. 4-69 Income Summary Expenses Revenues $ 25,000 6,900 25,000 25,000 18,100 18,100 6,900 Retained Earnings 6,900 bal. 7,000 Beg. bal. Then, close Income Summary to Retained Earnings. Bal. 18,100 25,000 Bal. Closing Journal Entries Once More!
  • 70. 4-70 Income Summary Expenses Revenues 25,000 18,100 18,100 6,900 Retained Earnings 6,900 bal. 7,000 Beg. bal. 25,000 The $6,900 credit to Retained Earnings represents what? Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! 6,900
  • 71. 4-71 Income Summary Expenses Revenues 25,000 18,100 18,100 6,900 Retained Earnings 6,900 bal. 7,000 Beg. bal. 25,000 Bal. 18,100 25,000 Bal. Closing Journal Entries Once More! Net Income! 6,900
  • 72. 4-72 7,000 B. bal. 6,900 N.I. Dividends 2,000 Retained Earnings  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
  • 73. 4-73 2,000 Close Dividends with a credit to Dividends and a debit to Retained Earnings. Dividends Retained Earnings 7,000 B. bal. 6,900 N.I.  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
  • 74. 4-74 2,000 2,000 2,000 Dividends Retained Earnings 7,000 B. bal. 6,900 N.I. Close Dividends with a credit to Dividends and a debit to Retained Earnings.  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
  • 75. 4-75 2,000 2,000 Div. 2,000 Determine the ending balance in Retained Earnings. Dividends Retained Earnings 7,000 B. bal. 6,900 N.I.  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
  • 76. 4-76 2,000 2,000 11,900 E. bal. Dividends Retained Earnings 7,000 B. bal. 6,900 N.I. Determine the ending balance in Retained Earnings. Div. 2,000  Dividends must also be closed to Retained Earnings at the end of the year. Closing Journal Entries Once More!
  • 77. 4-77 A = L + SE 865,000 = 426,000 + 439,000 Classified Balance Sheet Stockholders’ Equity Section Example STOCKHOLDERS' EQUITY Common Stock 300,000 $ Additional Paid-In Capital 95,000 Retained Earnings 44,000 Total Stockholders' Equity 439,000 $
  • 78. 4-78 THANK YOU VERY MUCH Wrap Up