Accounting IAccounting I

Chapter 17 – Recording Adjusting & Closing

Entries for a Partnership

ADJUSTING ENTRIES RECORDED IN A JOURNALADJUSTING ENTRIES RECORDED IN A JOURNAL

3. Account Debited

1. Heading 4. Debit

2. Date 5. Account Credited

6. Credit

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Lesson 17-1, page 422Lesson 17-1, page 422

PARTIAL WORK SHEET SHOWING ADJUSTMENTSPARTIAL WORK SHEET SHOWING ADJUSTMENTS

Lesson 17-1, page 423Lesson 17-1, page 423

BEFORE ADJUSTMENTAFTER ADJUSTMENT

Bal. 270,480.00Bal. 270,480.00

ADJUSTING ENTRY FOR MERCHANDISE INVENTORY ADJUSTING ENTRY FOR MERCHANDISE INVENTORY

Income Summary

(New Bal. 254,640.00)

Adj. (a) 15,840.00

Merchandise Inventory

Adj. (a) 15,840.00

Lesson 17-1, page 423Lesson 17-1, page 423

BEFORE ADJUSTMENTAFTER ADJUSTMENT

Bal. 6,480.00Bal. 6,480.00

Supplies Expense—Office

(New Bal. 1,750.00)

ADJUSTING ENTRY FOR OFFICE SUPPLIES ADJUSTING ENTRY FOR OFFICE SUPPLIES INVENTORYINVENTORY

Adj. (b) 4,730.00

Supplies Expense—Office

Adj. (b) 4,730.00

Lesson 17-1, page 424Lesson 17-1, page 424

BEFORE ADJUSTMENTAFTER ADJUSTMENT

Bal. 6,944.00Bal. 6,944.00

ADJUSTING ENTRY FOR STORE SUPPLIES ADJUSTING ENTRY FOR STORE SUPPLIES INVENTORY INVENTORY

Supplies Expense—Store

(New Bal. 3,034.00)

Adj. (c) 3,910.00

Supplies Expense—Store

Adj. (c) 3,910.00

Lesson 17-1, page 424Lesson 17-1, page 424

BEFORE ADJUSTMENTAFTER ADJUSTMENT

Bal. 5,800.00Bal. 5,800.00

Insurance Expense

(New Bal. 2,630.00)

ADJUSTING ENTRY FOR PREPAID INSURANCEADJUSTING ENTRY FOR PREPAID INSURANCE

Adj. (d) 3,170.00

Prepaid Insurance

Adj. (d) 3,170.00

Lesson 17-1, page 424Lesson 17-1, page 424

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Page 425Page 425

Income Summary

THE INCOME SUMMARY ACCOUNTTHE INCOME SUMMARY ACCOUNT

Lesson 17-2, page 426Lesson 17-2, page 426

DebitTotal expenses

CreditRevenue (greater than expenses)(Credit balance is the net income.)

CLOSING ENTRY FOR AN INCOME STATEMENT CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCEACCOUNT WITH A CREDIT BALANCE

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3. Debit to Close

1. Heading

4. Credit

2. Date

3

4

Lesson 17-2, page 427Lesson 17-2, page 427

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

42

3. Credit to Close

1. Date

4. Debit Total

2. Account Debited

1

3 3

Lesson 17-2, page 428Lesson 17-2, page 428

(New Bal. 69,615.85)

SUMMARY OF CLOSING ENTRY FOR INCOME SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCESSTATEMENT ACCOUNTS WITH DEBIT BALANCES

Closing (costs and expenses) 337,664.15

Lesson 17-2, page 429Lesson 17-2, page 429

Income Summary

Bal. 189,960.00

Purchases

Bal. 6,600.00

Advertising Expense

Bal. 3,385.00

Credit Card Fee Expense

Bal. 3,170.00

Insurance Expense

Bal. 2,584.15

Miscellaneous Expense

Bal. 9,105.00

Payroll Taxes Expense

Bal. 21,000.00

Rent Expense

Bal. 89,400.00

Salary Expense

Bal. 4,730.00

Supplies Expense—Office

Bal. 3,910.00

Supplies Expense—Store

Bal. 3,820.00

Utilities Expense

Closing (revenue) 423,120.00Adj. (mdse. inv.) 15,840.00

(New Bal. zero)Closing 189,960.00

(New Bal. zero)Closing 6,600.00

(New Bal. zero)Closing 3,385.00

(New Bal. zero)Closing 3,170.00

(New Bal. zero)Closing 2,584.15

(New Bal. zero)Closing 9,105.00

(New Bal. zero)Closing 21,000.00

(New Bal. zero)Closing 89,400.00

(New Bal. zero)Closing 4,730.00

(New Bal. zero)Closing 3,910.00

(New Bal. zero)Closing 3,820.00

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Page 430Page 430

CLOSING ENTRY TO RECORD NET INCOME OR LOSS CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNTAND CLOSE THE INCOME SUMMARY ACCOUNT

14

2

3. Debit to Close

1. Date

2. Account Debited

4. Accounts Credited

5. Credits to Record Net Income

3

Lesson 17-3, page 431Lesson 17-3, page 431

5

5. Credits to Record Net Income

CLOSING ENTRIES FOR THE PARTNERS’ DRAWING CLOSING ENTRIES FOR THE PARTNERS’ DRAWING ACCOUNTSACCOUNTS

14

2

3. Debit to Close

1. Date

2. Account Debited

4. Account Credited

3

5

Lesson 17-3, page 432Lesson 17-3, page 432

COMPLETED CLOSING ENTRIES FOR A COMPLETED CLOSING ENTRIES FOR A PARTNERSHIP RECORDED IN A JOURNALPARTNERSHIP RECORDED IN A JOURNAL

Lesson 17-3, page 433Lesson 17-3, page 433

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Page 434Page 434

POST-CLOSING TRIAL BALANCEPOST-CLOSING TRIAL BALANCE

1. Write the heading.

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2. List accounts that have balances.

3. Write debit balances.

4. Write credit balances.

5. Write the word Totals.

6. Total Debit column.

7. Total Credit column.

8. Verify equality of totals.

9. Rule double lines.

Lesson 17-4, page 437Lesson 17-4, page 437

ACCOUNTING CYCLE FOR A MERCHANDISING ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZES AS A PARTNERSHIP.BUSINESS ORGANIZES AS A PARTNERSHIP.

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1. Source documents checked for accuracy, and transactions are analyzed.

9. A post-closing trial balance is prepared.

2. Transactions are recorded in a journal.

3. Journal entries are posted to ledgers.

4. Schedules of accounts payable and accounts receivable are prepared from subsidiary ledgers.

5. Work sheet is prepared.6. Financial statements are

prepared.

7. Adjusting and closing entries are journalized.

8. Adjusting and closing entries are posted.

Lesson 17-4, page 438Lesson 17-4, page 438

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Page 439Page 439