1LESSON 8-3 ACCOUNTING CYCLE FOR A SERVICE BUSINESS 2 3 4 5 6 1 7 8 8.Prepare post-closing trial...
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Transcript of 1LESSON 8-3 ACCOUNTING CYCLE FOR A SERVICE BUSINESS 2 3 4 5 6 1 7 8 8.Prepare post-closing trial...
1 LESSON 8-3
ACCOUNTING CYCLE FOR A SERVICE BUSINESS
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8. Prepare post-closing trial balance
7. Post adjusting and closing entries
6. Journalize adjusting and closing entries
5. Prepare financial statements
4. Prepare work sheet
3. Post
2. Journalize
1. Analyzes transactions
LESSON 8-1 2
ADJUSTING ENTRY FOR SUPPLIES
LESSON 8-1 3
ADJUSTING ENTRY FOR PREPAID INSURANCE
SALES +EXPENSES INCOME SUMMARY CAPITAL ACCOUNT (OE)
CLOSING ENTRIES
TEMPORARY
PERMANENT
Permanent Accounts also known as Real Accounts - Assets, Liabilities and OE accounts
Temporary Accounts – used to accumulate information until it is transferred to OE accounts (e.g. Sales & Expenses)
Closing Entries – used to reduce temporary accounts back to 0. WHY??
LESSON 8-2 5
CLOSING ENTRIES TERMS REVIEW
WORK SHEET
LESSON 8-2 7
NEED FOR THE INCOME SUMMARY ACCOUNT
LESSON 8-2 8
CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE
(Debit to close)
LESSON 8-2 9
CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES
(Credit to close)
LESSON 8-2 10
CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME
SUMMARY ACCOUNT
(Income Summary:debit to close)
(Capital: credit torecord net income)
page 210
LESSON 8-2 11
CLOSING ENTRY FOR THE OWNER’S DRAWING ACCOUNT
(Credit to close)
page 211
1. Get a textbook.2. Go to schoolrack.com/dgarfinkel.
Click on “Accounting”3. Scroll down to “Chapter 8” and click
on “Activity: Excel Application Problem 8-2”
4. Open the file up and turn to p. 221 in the text
APPLICATION PROBLEM 8-2