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Chapter 8

Chapter 8. Recording Adjusting and Closing Entries. 21. Adjusting Entries. Adjusting entries – journal entries recorded to update general ledger accounts at the end of a fiscal period. 3. 4. ADJUSTING ENTRY FOR SUPPLIES. page 202. 1. Write the heading. 2. Write the date.

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Chapter 8

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  1. Chapter 8 Recording Adjusting and Closing Entries

  2. 21. Adjusting Entries Adjusting entries – journal entries recorded to update general ledger accounts at the end of a fiscal period

  3. 3 4 ADJUSTING ENTRY FOR SUPPLIES page 202 1. Write the heading. 2. Write the date. 3. Write the title of the account debited. Record the debit amount. 1 4. Write the title of the account credited. Record the credit amount. 2 LESSON 8-1

  4. 2 3 ADJUSTING ENTRY FOR PREPAID INSURANCE page 204 1. Write the date. 2. Write the title of the account debited. Record the debit amount. 3. Write the title of the account credited. Record the credit amount. 1 LESSON 8-1

  5. 22. Recording Closing Entries Permanent accounts – accounts used to accumulate information from one fiscal period to the next (aka Real accounts) Ex: Assets, liabilities, and owner’s capital Temporary accounts – accounts used to accumulate information until it is transferred to the owner’s capital account (aka Nominal accounts) Ex: Revenue, expenses, drawing, and income summary Closing entries – journal entries used to prepare temporary accounts for a new fiscal period

  6. NEED FOR THE INCOME SUMMARY ACCOUNT page 207 LESSON 8-2

  7. 3 4 CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE page 208 1 2 1. Write the heading. 2. Write the date. 3. Write the title of the account debited. Record the debit amount. 4. Write the title of the account credited. Record the credit amount. LESSON 8-2

  8. 3 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 209 1. Date 2. Income Summary 3. Credit 4. Debit amount 2 4 1 LESSON 8-2

  9. 2 3 CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT page 210 1. Date 2. Debit 3. Credit 1 LESSON 8-2

  10. 2 3 CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT page 211 1. Date 2. Debit 3. Credit 1 LESSON 8-2

  11. 23. Preparing a Post-Closing Trial Balance Post-closing trial balance – a trial balance prepared after the closing entries are posted Accounting cycle – the series of accounting activities included in recording financial information for a fiscal period

  12. GENERAL LEDGER ACCOUNTS AFTER ADJUSTING AND CLOSING ENTRIES ARE POSTED page 213 LESSON 8-3

  13. 4 3 2 5 7 8 POST-CLOSING TRIAL BALANCE page 216 1. Heading 1 2. Account titles 3. Account balances 4. Single rule 5. Compare totals 6. Totals 7. Record totals 6 8. Double rule LESSON 8-3

  14. ACCOUNTING CYCLE FOR A SERVICE BUSINESS page 217 1. Analyzes transactions 1 2. Journalize 2 3. Post 8 4. Prepare work sheet 5. Prepare financial statements 3 6. Journalize adjusting and closing entries 7 4 7. Post adjusting and closing entries 8. Prepare post-closing trial balance 6 5 LESSON 8-3

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