LESSON 22 4 Adjusting Closing and Reversing Entries

LESSON 22 -4 Adjusting, Closing, and Reversing Entries for a Corporation CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 22 -4

2 ADJUSTING ENTRIES CENTURY 21 ACCOUNTING © Thomson/South-Western page 654 LESSON 22 -4

3 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES page 655 1 2 1. Enter the balance of accounts in the Income Statement column as a debit. 2. Enter the total of the debit entries as a credit to Income Summary. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 22 -4

4 CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES 1 1. Enter the account title Income Summary. 2. Enter the balance of every account in the Income Statement debit column as a credit. 3 2 CENTURY 21 ACCOUNTING © Thomson/South-Western page 656 3. Enter the total of the credit entries as a debit to Income Summary. LESSON 22 -4

5 CLOSING ENTRY TO RECORD NET INCOME page 657 1 2 1. Debit Income Summary. 2. Credit Retained Earnings. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 22 -4

6 CLOSING ENTRY FOR DIVIDENDS page 657 1 2 1. Debit Retained Earnings. 2. Credit Dividends. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 22 -4

7 REVERSING ENTRIES page 658 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. 1 2 3 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 22 -4

8 ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION 2 1 3 4 page 659 1. Analyze source documents for accuracy and into the accounts debit and credit parts. 2. Journalize source documents into the appropriate journal. 3. Post journal entries to the general ledger and subsidiary ledger. 4. Prepare schedule of Accounts Receivable and Accounts Payable using the ledgers. (continued on next slide) CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 22 -4

9 ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION page 659 5. Create a work sheet, including a trial balance and an adjustment for federal income tax expense, is prepared from the general ledger. 6. Prepare financial statements are from the work sheet: income statement, stmt. Stockholder’s equity, and balance sheet. 9 8 5 7 6 CENTURY 21 ACCOUNTING © Thomson/South-Western 7. Journalize and post adjusting and closing entries from the work sheet to the general ledger. 8. Prepare a post-closing trial balance of the general ledger. 9. Journalize and post reversing entries to the general ledger. LESSON 22 -4