Kế toán, kiểm toán - Chapter 6: Closing entries and the postclosing trial balance

1-*McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Closing Entries and the PostclosingTrial Balance Section 1: Closing EntriesChapter6Section ObjectivesJournalize and post closing entries.The Accounting CycleStep 7 Journalize and post closing entriesStep 1 Analyze transactionsStep 2 Journalize the data about transactionsStep 4 Prepare a worksheetStep 5Prepare financial statementsStep 6 Journalize and post adjusting entriesStep 8 Prepare a postclosing trial balanceStep 9 Interpret the financial informationStep 3 Post the data about transactionsThe seventh step in the accounting cycle is to journalize and post closing entriesStep 7 Journalize and post closing entriesIncome Summary AccountClassified as a temporary owner’s equity account.Does not have a normal balance.Has a zero balance after the closing process and remains with a zero balance until after the closing procedure for the next period.2. Transfer the expense account balances to the Income Summary account.4. Transfer the balance of the drawing account to the owner’s capital account. 3. Transfer the balance of the Income Summary account to the owner’s capital account.1. Transfer the balance of revenue account balances to the Income Summary account.Objective 1Journalize and post closing entriesThere are four steps in the closing process: The Income Statement section of the worksheet for  Wells’ Consulting Services lists five expense accounts. Since expense accounts have debit balances, enter a  credit in each account to reduce its balance to zero. This closing entry transfers total expenses to the  Income Summary account.Step 2: Close Expenses The journal entry to transfer net income to owner’s equity is a debit to Income Summary, and a credit to Carolyn Wells, Capital. The balance of Income Summary is reduced to zero; the owner’s capital account is increased by the amount of net income.Step 3: Close Net Income to Capital The Income Summary account is reduced to zero. The net income amount, $33,667, is transferred to the owner’s capital account. Carolyn Wells, Capital is increased by $33,667.Withdrawals appear in the statement of owner’s equity as a deduction from capital. The drawing account is closed directly to the capital account. The drawing account balance is reduced to zero.The balance of the drawing account, $5,000, is  transferred to the owner’s capital account. Step 4: Close Drawing to CapitalSummary of Closing Entries GENERAL JOURNAL PAGE 4 POST. DATE DESCRIPTION REF. DEBIT CREDIT 2013 Closing Entries Dec. 31 Fees Income 401 47,000.00 Income Summary 309 47,000.00 31 Income Summary 309 13,333.00 Salaries Expense 511 8,000.00 Utilities Expense 514 650.00 Supplies Expense 517 500.00 Rent Expense 520 4,000.00 Depr. Expense-Equip. 523 183.00 31 Income Summary 309 33,667.00 Carolyn Wells, Capital 301 33,667.00 31 Carolyn Wells, Capital 301 5,000.00 Carolyn Wells, Draw. 302 5,000.00 STEPS1. Close Revenue Account2. Close Expense Accounts3. CloseIncome Summary4. CloseDrawing Account “Closing” is entered in the Description column of  the ledger accounts. The ending balances of the drawing, revenue, and expense accounts are zero. Posting the Closing EntriesAll journal entries are posted to the general ledger accounts. Closing Entriesand the PostclosingTrial BalanceSection 2: Using Accounting InformationChapter62. Prepare a postclosing trial balance.3. Interpret financial statements.4. Review the steps in the accounting cycle.What is the postclosing trial balanceA postclosing trial balance is report that is prepared to prove the equality of total debits and credits after the closing process is completed. It verifies that revenue, expense, and drawing accounts have zero balances.QUESTION: ANSWER: Wells’ Consulting Services Postclosing Trial Balance December 31, 2013 ACCOUNT NAME DEBIT CREDIT Cash 111,350.00 Accounts Receivable 5,000.00Supplies 1,000.00Prepaid Rent 4,000.00 Equipment 11,000.00Accumulated Depreciation–Equipment 183.00 Accounts Payable 3,500.00Carolyn Wells, Capital 128,667.00Totals 132,350.00 132,350.00What is the cash balance?How much do the customers owe the business? Wells’ Consulting Services Partial Balance Sheet December 31, 2013 Assets Cash $ 111,350.00 Accounts Receivable 5,000.00Supplies 1,000.00Prepaid Rent 4,000.00 Equipment $ 11,000.00Less Accumulated Depreciation 183.00 10,817.00Total Assets $ 132,167.00How much does the business owe its suppliers? Wells’ Consulting Services Balance Sheet December 31, 2013 Assets Cash $ 111,350.00 Accounts Receivable 5,000.00Supplies 1,000.00Prepaid Rent 4,000.00 Equipment $ 11,000.00Less Accumulated Depreciation 183.00 10,817.00Total Assets $ 132,167.00 Liabilities and Owner’s EquityLiabilities Accounts Payable $ 3,500.00Owner’s Equity Carolyn Wells, Capital 128,667.00Total Liabilities and Owner’s Equity $132,167.00 Wells’ Consulting Services Income Statement Month Ended December 31, 2013 Revenue Fees Income 47,000.00 Expenses Salaries Expense 8,000.00 Utilities Expense 650.00 Supplies Expense 500.00 Rent Expense 4,000.00 Depr. Expense--Equipment 183.00 Total Expenses 13,333.00Net Income for the Month 33,667.00What is the profit?Flow of Data Through a Simple Accounting SystemSource DocumentsSource documents are analyzedGeneral journalGeneral ledgerWorksheetFinancialstatementsSource Documents