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Les 26 4
- 2. CLOSING ENTRY FOR ACCOUNTS WITH CREDIT
BALANCES
1
2
1. Enter the balance of accounts in the Income
Statement credit column as a debit.
2. Enter the total of debit entries as a credit to to
Income Summary.
Lesson 26-4, page 678
© South-Western
Educational Publishing
- 3. CLOSING ENTRY FOR ACCOUNTS WITH DEBIT
BALANCES
1. Enter Income
Summary.
2. Enter the
1 2 balance of
every account
in the Income
Statement
debit column
as a credit.
3 3. Enter the total
as a debit to
Income
Summary.
Lesson 26-4, page 679
© South-Western
Educational Publishing
- 4. CLOSING ENTRY TO RECORD NET INCOME
1
2
1. Debit Income Summary
2. Credit Retained Earnings
Lesson 26-4, page 680
© South-Western
Educational Publishing
- 5. CLOSING ENTRY FOR DIVIDENDS
1
2
1. Debit Retained Earnings
2. Credit Dividends
Lesson 26-4, page 680
© South-Western
Educational Publishing
- 6. REVERSING ENTRIES
1. Reverse the entry
that created a
balance in
Interest
Receivable.
2. Reverse the entry
that created a
balance in
Interest Payable.
1 3. Reverse the entry
that created a
2 balance in
Federal Income
Tax Payable.
3
Lesson 26-4, page 681
© South-Western
Educational Publishing
- 7. ACCOUNTING CYCLE FOR A MERCHANDISING
BUSINESS ORGANIZED AS A CORPORATION
1. Source documents checked for accuracy,
and transactions are analyzed.
2. Transactions are recorded in a
1 2 journal.
3. Journal entries are posted to
9 ledgers.
4. Schedules of accounts
8 3 payable and accounts
receivable are prepared from
subsidiary ledgers.
4
5. Work sheet is prepared.
5
6. Financial statements are
7 prepared.
7. Adjusting and closing
entries are journalized.
8. A post-closing trial
6 balance is prepared.
9. Reversing entries are
journalized and posted to Lesson 26-4, page 682
the general ledger. © South-Western
Educational Publishing