Chapter 17
description
Transcript of Chapter 17
Chapter 17Chapter 17
Recording Adjusting and Recording Adjusting and Closing Entries for a Closing Entries for a
PartnershipPartnership
Adjusting EntriesAdjusting Entries
We adjust accounts that we do not We adjust accounts that we do not change over a period of time. change over a period of time.
We bring those accounts up to date We bring those accounts up to date or “Adjust” them so that they are or “Adjust” them so that they are correct at the end of the year.correct at the end of the year.
Account Title Trial Balance Adjustments
Debit Credit Debit Credit
Merchandise Inventory 270480 (a)15840
Supplies - Office 6480 (b)4730
Supplies - Store 6944 (c)3910
Prepaid Insurance 5800 (d)3170
Income Summary (a)15840
Insurance Expense (d)3170
Supplies Expense - Office (b)4730
Supplies Expense - Store (c)3910
Worksheet
General Journal Page 1
Date Account Title Doc No Post Ref Debit Credit
Adjusting Entries
Dec 31 Income Summary 15840
Merchandise Inventory 15840
31 Supplies Expense - Office 4730
Supplies - Office 4730
31 Supplies Expense - Store 3910
Supplies - Store 3910
31 Insurance Expense 3170
Prepaid Insurance 3170
Lets do the On Your Own on Lets do the On Your Own on Page 433Page 433
Date Account Title Doc. No Post Ref Debit CreditGeneral Journal
Dec 31
ADJUSTING ENT
INCOME SUMMARY
MERCH. INV 14400
14400SUPP EXPENSE - OFF 2130
2130SUPPLIES - OFFICE
SUPP EXPENSE - STORE
SUPPLIES - STORE
2210
2210
INSURANCE EXP
PREPAID INS
2890
2890
Closing EntriesClosing Entries
We have done this once before.We have done this once before. Here are the steps that we useHere are the steps that we use
Close all of the accounts in the Credit Close all of the accounts in the Credit column of the income statement column of the income statement column.column.
Please look at page 400 in Please look at page 400 in text booktext book
General Journal Page 2
Date Account Title Doc No Post Ref Debit Credit
Closing Entries
Dec 31 Sales 423120
Income Summary 423120
Close all credit balance accounts in the income statement column.
Do not forget to Post Reference all of this
Closing EntriesClosing Entries
We have done this once before.We have done this once before. Here are the steps that we useHere are the steps that we use
Close all of the accounts in the Credit Close all of the accounts in the Credit column of the income statement column of the income statement column.column.
Close all of the accounts in the Debit Close all of the accounts in the Debit column of the income statement column of the income statement column.column.
General Journal Page 2
Date Account Title Doc No Post Ref Debit Credit
Closing Entries
Dec 31 Sales 423120
Income Summary 423120
Dec 31 Income Summary 337664
Purchases 189960
Advertising Expense 6600
Credit Card Expense 3385
Insurance Expense 3170
Miscellaneous Expense 2584.15
Payroll Taxes Expense 9105
Rent Expense 21000
Salary Expense 89400
Supplies Expense - Office 4730
Supplies Expense - Store 3910
Utilities Expense 3820
Close all of the accounts in the Debit column of the income statement column.Close all of the accounts in the Debit column of the income statement column.
Closing EntriesClosing Entries
We have done this once before.We have done this once before. Here are the steps that we useHere are the steps that we use
Close all of the accounts in the Credit Close all of the accounts in the Credit column of the income statement column.column of the income statement column.
Close all of the accounts in the Debit Close all of the accounts in the Debit column of the income statement column.column of the income statement column.
Close the income summary into the Close the income summary into the capital accountscapital accounts
Omni Imports
Distribution of Net Income Statement
Karl Kohen
50% of Net Income $ 34,807.93
Michelle Wu
50 % of Net Income $ 34,807.93
Net Income $ 69,615.86
We need to take a look at our Distribution of net income and it should match what the balanceOf our income summary account is……From this point on we can not use the worksheet to get our information
General Journal Page 2
Date Account Title Doc No Post Ref Debit Credit
Closing Entries
Dec 31 Sales 423120
Income Summary 423120
Dec 31 Income Summary 337664
Purchases 189960
Advertising Expense 6600
Credit Card Expense 3385
Insurance Expense 3170
Miscellaneous Expense 2584.15
Payroll Taxes Expense 9105
Rent Expense 21000
Salary Expense 89400
Supplies Expense - Office 4730
Supplies Expense - Store 3910
Utilities Expense 3820
Dec 31 Income Summary 69615.85
Karl Kohen,Captial 34807.93
Michelle Wu, Captial 34807.93
Closing EntriesClosing Entries
We have done this once before.We have done this once before. Here are the steps that we useHere are the steps that we use
Close all of the accounts in the Credit Close all of the accounts in the Credit column of the income statement column.column of the income statement column.
Close all of the accounts in the Debit Close all of the accounts in the Debit column of the income statement column.column of the income statement column.
Close the income summary into the capital Close the income summary into the capital accountsaccounts
Close the drawing accounts into the capital Close the drawing accounts into the capital accountsaccounts
We go back to the worksheet on page 400 and look at the drawing accounts. We need to Make those accounts zero.
General Journal Page 2
Date Account Title Doc No Post Ref Debit Credit
Closing Entries
Dec 31 Sales 423120
Income Summary 423120
Dec 31 Income Summary 337664
Purchases 189960
Advertising Expense 6600
Credit Card Expense 3385
Insurance Expense 3170
Miscellaneous Expense 2584.15
Payroll Taxes Expense 9105
Rent Expense 21000
Salary Expense 89400
Supplies Expense - Office 4730
Supplies Expense - Store 3910
Utilities Expense 3820
Dec 31 Income Summary 69615.85
Karl Kohen, Captial 34807.93
Michelle Wu, Capital 34807.93
Dec 31 Karl Kohen, Capital 29100
Karl Kohen, Drawing 29100
31 Michelle Wu, Capital 28800
Michelle Wu, Drawing 28800
Post-closing trial balancePost-closing trial balance
Now that we have closed all of the Now that we have closed all of the temporary accounts. temporary accounts.
We need to make sure that the rest We need to make sure that the rest of our permanent accounts are still of our permanent accounts are still in balance.in balance.
Encore Music
Post-Closing Trial Balance
August 31, 20xx
Account Title Debit Credit
Cash 29080.28
Petty Cash 300
Accounts Receivable 11198.4
Merchandise Inventory 254640
Supplies - Office 1750
Supplies - Store 3034
Prepaid Insurance 2630
Accounts Payable 12542.38
Employee Income Tax Payable 542
Social Security Tax Payable 985.4
Medicare Tax Payable 227.42
Sales Tax Payable 2112.05
Unemployment Tax Payable- Fed 8.4
Unemployment Tax Payable - State 56.7
Health Insurance Premiums payable 1008
U.S. Savings Bonds Payable 61
United Way Donations Payable 72
Karl Koehn, Capital 142457.93
Michelle Wu, Capital 142560.4
Totals 302632.68 302632.68
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