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Partnership Accounting Adjusting and Closing Entries

Learn how to record and adjust entries for a partnership, including income summary, closing entries, and preparing a post-closing trial balance. Understand the accounting cycle for a partnership business.

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Partnership Accounting Adjusting and Closing Entries

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  1. Accounting I Chapter 17 – Recording Adjusting & Closing Entries for a Partnership

  2. 2 1 4 3 5 6 ADJUSTING ENTRIES RECORDED IN A JOURNAL 4. Debit 1. Heading 5. Account Credited 2. Date 6. Credit 3. Account Debited Lesson 17-1, page 422

  3. PARTIAL WORK SHEET SHOWING ADJUSTMENTS Lesson 17-1, page 423

  4. Merchandise Inventory Income Summary ADJUSTING ENTRY FOR MERCHANDISE INVENTORY AFTER ADJUSTMENT BEFORE ADJUSTMENT Adj. (a) 15,840.00 Bal. 270,480.00 Bal. 270,480.00 Adj. (a) 15,840.00 (New Bal. 254,640.00) Lesson 17-1, page 423

  5. Supplies Expense—Office Supplies Expense—Office ADJUSTING ENTRY FOR OFFICE SUPPLIES INVENTORY AFTER ADJUSTMENT BEFORE ADJUSTMENT Adj. (b) 4,730.00 Bal. 6,480.00 Bal. 6,480.00 Adj. (b) 4,730.00 (New Bal. 1,750.00) Lesson 17-1, page 424

  6. Supplies Expense—Store Supplies Expense—Store ADJUSTING ENTRY FOR STORE SUPPLIES INVENTORY AFTER ADJUSTMENT BEFORE ADJUSTMENT Adj. (c) 3,910.00 Bal. 6,944.00 Bal. 6,944.00 Adj. (c) 3,910.00 (New Bal. 3,034.00) Lesson 17-1, page 424

  7. Prepaid Insurance Insurance Expense ADJUSTING ENTRY FOR PREPAID INSURANCE AFTER ADJUSTMENT BEFORE ADJUSTMENT Adj. (d) 3,170.00 Bal. 5,800.00 Bal. 5,800.00 Adj. (d) 3,170.00 (New Bal. 2,630.00) Lesson 17-1, page 424

  8. Work Together & On Your Own – Page 425

  9. Income Summary THE INCOME SUMMARY ACCOUNT Debit Total expenses Credit Revenue (greater than expenses) (Credit balance is the net income.) Lesson 17-2, page 426

  10. 3 4 CLOSING ENTRY FOR AN INCOME STATEMENT ACCOUNT WITH A CREDIT BALANCE 1 2 1. Heading 2. Date 3. Debit to Close Lesson 17-2, page 427 4. Credit

  11. 3 3 1 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES 1. Date 2. Account Debited 3. Credit to Close 4. Debit Total 2 4 Lesson 17-2, page 428

  12. Adj. (mdse. inv.) 15,840.00 Closing (revenue) 423,120.00 Supplies Expense—Store Miscellaneous Expense Payroll Taxes Expense Insurance Expense Utilities Expense Supplies Expense—Office Credit Card Fee Expense Advertising Expense Salary Expense Rent Expense Purchases Bal. 189,960.00 Bal. 21,000.00 Closing 189,960.00 Closing 21,000.00 (New Bal. zero) (New Bal. zero) Bal. 6,600.00 Bal. 89,400.00 Closing 6,600.00 Closing 89,400.00 (New Bal. zero) (New Bal. zero) Income Summary Bal. 3,385.00 Bal. 4,730.00 Closing 3,385.00 Closing 4,730.00 (New Bal. zero) (New Bal. zero) Bal. 3,170.00 Bal. 3,910.00 Closing 3,170.00 Closing 3,910.00 (New Bal. zero) (New Bal. zero) Bal. 2,584.15 Bal. 3,820.00 Closing 2,584.15 Closing 3,820.00 (New Bal. zero) (New Bal. zero) Bal. 9,105.00 Closing 9,105.00 (New Bal. zero) SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES Closing (costs and expenses) 337,664.15 (New Bal. 69,615.85) Lesson 17-2, page 429

  13. Work Together & On Your Own – Page 430

  14. 3 5 CLOSING ENTRY TO RECORD NET INCOME OR LOSS AND CLOSE THE INCOME SUMMARY ACCOUNT 2 1 4 1. Date 4. Accounts Credited 5. Credits to Record Net Income 2. Account Debited Lesson 17-3, page 431 3. Debit to Close

  15. 5 CLOSING ENTRIES FOR THE PARTNERS’ DRAWING ACCOUNTS 1. Date 2. Account Debited 3. Debit to Close 4. Account Credited 2 5. Credits to Record Net Income 3 4 1 Lesson 17-3, page 432

  16. COMPLETED CLOSING ENTRIES FOR A PARTNERSHIP RECORDED IN A JOURNAL Lesson 17-3, page 433

  17. Work Together & On Your Own – Page 434

  18. 8 9 POST-CLOSING TRIAL BALANCE 1 1. Write the heading. 3 2. List accounts that have balances. 2 3. Write debit balances. 4. Write credit balances. 4 5. Write the word Totals. 6. Total Debit column. 7. Total Credit column. 8. Verify equality of totals. 9. Rule double lines. 6 7 5 Lesson 17-4, page 437

  19. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZES AS A PARTNERSHIP. 1. Source documents checked for accuracy, and transactions are analyzed. 1 2. Transactions are recorded in a journal. 2 9 3. Journal entries are posted to ledgers. 4. Schedules of accounts payable and accounts receivable are prepared from subsidiary ledgers. 3 8 4 5. Work sheet is prepared. 5 6. Financial statements are prepared. 7 7. Adjusting and closing entries are journalized. 8. Adjusting and closing entries are posted. 6 9. A post-closing trial balance is prepared. Lesson 17-4, page 438

  20. Work Together & On Your Own – Page 439

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