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Comprehensive Guide to Closing Entries for Income Statement Accounts

Learn how to record closing entries for income statement accounts and manage the income summary account effectively. Includes step-by-step instructions and examples.

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Comprehensive Guide to Closing Entries for Income Statement Accounts

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  1. LESSON 16-2 Recording Closing Entries for Income Statement Accounts

  2. THE INCOME SUMMARY ACCOUNT page 487 LESSON 16-2

  3. 3 3 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES page 488 1 2 4 1. Heading 3. Debits to close 2. Date 4. Credit to Income Summary LESSON 16-2

  4. 3 3 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 489 1. Date 2. Account debited 3. Credits to close 4. Debit amount 1 2 4 LESSON 16-2

  5. Purchases Bal. 209,960.00 Closing 209,960.00 (New Bal. zero) Income Summary Adj. (mdse. inv.) 15,840.00 Closing (credit amounts) 500,253.10 Closing (debit accounts) 404,099.15 (New Bal. 80,313.95) SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 490 LESSON 16-2

  6. CLOSING ENTRY TO RECORD NET INCOME page 491 1 2 3 1. Date 2. Debit Income Summary 3. Credit Retained Earnings LESSON 16-2

  7. CLOSING ENTRY FOR DIVIDENDS page 491 1 2 3 1. Date 2. Debit Retained Earnings 3. Credit Dividends LESSON 16-2

  8. COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNAL page 492 LESSON 16-2

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