Chapter10ClosingEntries.ppt

10-1CLOSING ENTRIESCHAPTER 10CHAPTER 1010-2Learning objectivesl1. Be able to close income and expense items to the balance sheet accounts.l2. Be able to conduct post-closing trial balance.10-3Closing EntriesThe final bookkeeping entries made at the end of an accounting period to transfer income and expense items to the balance sheet accounts.Definition10-4Closing EntriesThe closing entries consist of the four steps: First, the revenue accounts are closed by transferring their balances to the income summary account. Second, the expense accounts are closed by transferring their balances to the income summary account. Third, the income summary is closed by transferring the net balance to capital account. Last, the withdrawals accounts are closed by transferring the balance to capital account. 10-5Closing EntriesSTEP 110-6Closing Entries  Step  1.  Closing  the  credit  balances  from  income statement accounts to the income summary.March. 31 Dr. Haircutting Services Revenue     ＄＄2,800     Cr. Income Summary            ＄＄2,80010-7Closing EntriesThe posting is shown as following: Haircutting Services Revenue Account No. 411 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch 10193131 Adjusting Closing     $2,800  $9001,400500  $9002,3002,800  ___10-8Closing Entries Income Summary Account No. 313 Date Item Post.Ref. Debit Credit Balance Debit Credit XXMarch 31 Closing    $2,800 $2,80010-9Closing EntriesSTEP 210-10Closing EntriesStep  2.  Closing  the  debit  balances  from  income statement accounts to the income summary. Jan. 31  Income Summary           $1403.3Wages Expense                          1,100  Utility Expense                             230  Telephone Expense                      120 Rent Expense                              400  Insurance Expense                        50 10-11Closing EntriesDepreciation Expense, Haircutting Equipment              13.3Depreciation Expense, Store Equipment                    40 Haircutting Supplies Expense         100 Office Supplies Expense                    50 10-12Closing EntriesThe posting is shown as following: Wages Expense Account No. 511 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               2531 Closing  $400    $400  $400 _____ Utility Expense Account No. 512 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               2931 Closing  $230    $230  $230_____ 10-13Closing EntriesTelephone Expense Account No. 513 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 Closing  $120    $120  $120____ Haircutting Supplies Expense Account No. 516 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 AdjustingClosing  $100    $100  $100____ 10-14Closing EntriesOffice Supplies Expense Account No. 517 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 AdjustingClosing  $50    $50  $50____ Rent Expense Account No. 514 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 AdjustingClosing  $400    $400  $400____ 10-15Closing EntriesInsurance Expense Account No. 515 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 AdjustingClosing  $50    $50  $50_____ Depreciation Expense, Haircutting Equipment Account No.542 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 AdjustingClosing  $13.3    $13.3  $13.3____ 10-16Closing EntriesDepreciation Expense, Store Equipment Account No. 543 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 AdjustingClosing  $40    $40  $40____ Income Summary Account No. 313 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch               3131 AdjustingClosing  $1,403.3   $2,800  $2,8001,396.710-17STEP 3Closing Entries10-18Closing EntriesStep 3. Closing the income summary account to the capital account. March. 31 Dr. Income Summary         ＄＄1,396.7     Cr. Stev Taylor, Capital            ＄＄1,396.710-19Closing EntriesIncome Summary Account No. 313 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch 313131 ClosingClosingClosing     $1,403.3    1,396.7   $2,800   $2,800  1,396.7    _____Stev Taylor, Capital Account No. 311 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               331 Closing     $ $1 10,0000,000     1,396.7 $ $1 10,0000,000     11,396.710-20Closing EntriesSTEP 410-21Closing EntriesStep 4.Closing the Withdrawals Account to the Capital Account.     The Withdrawals account shows the amount that the owner takes from the business account for personal living expenditures.10-22Closing EntriesMarch. 31 Stev Taylor, Capital             ＄＄480Stev Taylor, Withdrawals                     ＄＄480Stev Taylor, Withdrawals Account No. 312 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               2431 Closing   $480   $480  $480 _____10-23Closing EntriesStev Taylor, Capital Account No. 311 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch 33131 ClosingClosing   $480   $ $1 10,0000,0001,396.7  $ $1 10,0000,00011,396.711,396.7 10,916.70,916.710-24Closing EntriesThe accounts after closing entries are postedCash                                      Account No.111 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch 3 36 67 77 78 89 91414191924242525  29  $ $1 10,0000,000    1,3001,300         1,400        $9,900  $4,800$4,8008 800001,41,400006006006 60000  4 480804 40000           230    $ $1 10,0000,0005,2005,2004,44,400003,03,000002,42,400001,81,800003,13,100004,54,500004,04,020203,63,62020       3,33,390 90  10-25Closing EntriesAccounts Receivable Account No.113 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch 10 $900  $900 Haircutting Supplies Account No.115 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               831 Adjusting  $400   $100 $400  300 10-26Closing EntriesOffice Supplies Account No. 116 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch 831Adjusting $200 $50 $200$150 Prepaid Rent Account No. 117 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               631 Adjusting  $4,800   $400 $4,8004400 10-27Closing EntriesPrepaid Insurance Account No. 118 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch 831Adjusting $6,00   $50 $600  550  Haircutting Equipment Account No. 144 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               7Adjusting  $800  $80010-28Closing EntriesStore Equipment Account No. 146 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch7 $2,400  $2,400 Accumulated Depreciation, Haircutting Equipment Account No. 145 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               31Adjusting   $13.3 $13.310-29Closing EntriesAccumulated Depreciation, Store Equipment Account No. 147 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch31Adjusting          $40          $40Accounts Payable Account No. 212 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               789 31       $600 $1,000     600     120 $1,000  1,600  1,000  1,120 10-30Closing EntriesUnearned Haircutting Fees Account No. 213 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch1431Adjusting   $500 $1,300  $1,300   800 Stev Taylor, Withdrawals Account No. 312 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               2431Closing $4980   $480 $480 ____10-31Closing EntriesStev Taylor, Capital Account No. 311 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch331  31 ClosingClosing   $480 $10,000  1,396.7  $10,000  11,396.7  10,916.7Income Summary Account No. 313 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch                313131 ClosingClosingClosing $1,403.3  1,396.7 $2,800 $2,800 1,396.7_____ 10-32Closing EntriesHaircutting Services Revenue Account No. 411 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch10193131 Adjusting Closing     $2,800 $9001,400500  $9002,3002,800 _____Wages Expense Account No. 511 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch                2531 Closing $400    $400 $400_______ 10-33Closing EntriesUtility Expense Account No. 512 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch2931  Closing   $230  $230 $230 ______  Telephone Expense Account No. 513 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               3131 Closing $120    $120 $120______ 10-34Closing EntriesHaircutting Supplies Expense Account No. 516 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch3131  Adjusting Closing   $100  $100 $100 ______  Office Supplies Expense Account No. 517 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               3131 Adjusting Closing $50    $50 $50______ 10-35Closing EntriesRent Expense Account No. 514 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch3131  Adjusting Closing   $400  $400 $400 ______  Insurance Expense Account No. 515 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               3131 Adjusting Closing $50    $50 $50______ 10-36Closing EntriesDepreciation Expense, Haircutting Equipment Account No.542 Date Item Post.Ref. Debit Credit Balance Debit Credit 20XXMarch3131  Adjusting Closing   $13.3  $13.3 $13.3 ______  Depreciation Expense, Store Equipment Account No. 543 Date Item Post.Ref. Debit Credit Balance Debit     Credit 20XXMarch               3131 Adjusting Closing $40    $40 $40______ 10-37Closing EntriesOnce posted to the ledger  Revenue Expense  Withdrawals ZEROThe next accounting period 10-38The Post-closing Trial Balance It can be used to alert you to errors in your books during the process of posting the adjustments and closing entries to the ledger accounts. The total debits must equal the total credits. The trial balanceThe trial balance is a worksheet on which you list all your general ledger accounts and their debit or credit balance. 10-39Cash Accounts Receivable Haircutting SuppliesOffice SuppliesPrepaid RentPrepaid InsuranceHaircutting EquipmentAccumulated Depreciation, Haircutting  EquipmentOffice EquipmentAccumulated Depreciation,  Store EquipmentAccounts PayableUnearned Haircutting FeesStev Taylor, Capital     Total $3,390900 3001504,400550800  2,400     $12,890         13.3  40$1,120      80010,916.7                                             $12,890  Stev’s Barber Shop  Post-Closing Trial BalanceMarch 31, 20XX 10-40WE ARE SAILING RIGHT ALONG!!。