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Accounting Processes for a Corporation: Adjusting, Closing, Reversing Entries

Learn how to adjust, close, and reverse entries for a corporation. Understand income statements, retention of earnings, dividends, and reversing entries to ensure accurate financial records.

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Accounting Processes for a Corporation: Adjusting, Closing, Reversing Entries

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  1. LESSON 22-4 Adjusting, Closing, and Reversing Entries for a Corporation

  2. ADJUSTING ENTRIES page 654 LESSON 22-4

  3. CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES page 655 1 2 1. Enter the balance of accounts in the Income Statement column as a debit. 2. Enter the total of the debit entries as a credit to Income Summary. LESSON 22-4

  4. CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES page 656 1. Enter the account title Income Summary. 1 3 2. Enter the balance of every account in the Income Statement debit column as a credit. 2 3. Enter the total of the credit entries as a debit to Income Summary. LESSON 22-4

  5. CLOSING ENTRY TO RECORD NET INCOME page 657 1 2 1. Debit Income Summary. 2. Credit Retained Earnings. LESSON 22-4

  6. CLOSING ENTRY FOR DIVIDENDS page 657 1 2 1. Debit Retained Earnings. 2. Credit Dividends. LESSON 22-4

  7. 1 REVERSING ENTRIES page 658 1. Reverse the entry that created a balance in Interest Receivable. 2. Reverse the entry that created a balance in Interest Payable. 3. Reverse the entry that created a balance in Federal Income Tax Payable. 2 3 LESSON 22-4

  8. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION page 659 1. Analyze source documents for accuracy and into the accounts debit and credit parts. 2 1 2. Journalize source documents into the appropriate journal. 3 3. Post journal entries to the general ledger and subsidiary ledger. 4 4. Prepare schedule of Accounts Receivable and Accounts Payable using the ledgers. (continued on next slide) LESSON 22-4

  9. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION page 659 5. Create a work sheet, including a trial balance and an adjustment for federal income tax expense, is prepared from the general ledger. 9 6. Prepare financial statements are from the work sheet: income statement, stmt. Stockholder’s equity, and balance sheet. 8 7. Journalize and post adjusting and closing entries from the work sheet to the general ledger. 5 7 8. Prepare a post-closing trial balance of the general ledger. 9. Journalize and post reversing entries to the general ledger. 6 LESSON 22-4

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