ADJUSTING ENTRIES

1
ADJUSTING ENTRIES
Lesson 26-4, page 677
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
3
CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES
1. Enter Income Summary.
2. Enter the balance of every account in the
Income Statement debit column as a credit.
2
1
3. Enter the total as a debit to Income Summary.
Lesson 26-4, page 679
4
CLOSING ENTRY TO RECORD NET INCOME
1
2
1. Debit Income Summary
2. Credit Retained Earnings
Lesson 26-4, page 680
5
CLOSING ENTRY FOR DIVIDENDS
1
2
1. Debit Retained Earnings
2. Credit Dividends
Lesson 26-4, page 680
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.
3. Reverse the entry that created a balance in
Federal Income Tax Payable.
Lesson 26-4, page 681
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 journal.
2
1
3. Journal entries are posted to ledgers.
9
4. Schedules of accounts payable and accounts
receivable are prepared from subsidiary ledgers.
3
8
4
5. Work sheet is prepared.
5
6. Financial statements are prepared.
7
7. Adjusting and closing entries are journalized.
8. A post-closing trial balance is prepared.
6
9. Reversing entries are journalized and posted
to the general ledger.
Lesson 26-4, page 682