CHAPTER SIX

1
CHAPTER SIX

• FINANCIAL STATEMENTS AND THE CLOSING PROCESS

2
WORK SHEET

• Used for three major end-of-period activities
• journalizing adjusting entries
• preparing financial statements
• journalizing closing entries

3
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
From this work sheet, we can prepare the
financial statements.
Ppd. Ins.
175
175
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
J J, Cap.
2000
2000
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp.
700
Rent Exp.
200
200
Sup. Exp
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
1015
2150
4965
2150
4965
4
PREPARING FINANCIAL STATEMENTS

• 1st Prepare the Income Statement.
• 2nd Prepare the Statement of Owners
  Equity.
• 3rd Prepare the Balance Sheet.

5
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Heading should contain 3 lines
1. Company Name
2. Statement Title
3. Time period covered or date
6
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Revenues are shown first.
7
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Revenue
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
J J, Cap.
2000
2000
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp.
700
Rent Exp
200
200
Sup. Exp.
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
1015
2150
4965
2150
4965
8
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Delivery Fees
2,150
Top amount in each column will include .
9
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Delivery Fees
2,150
When there is only one revenue account, Total
Revenues is not computed or shown.
10
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Delivery Fees
2,150
Expenses
Expenses are shown next.
11
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Expenses
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts Pay
1800
1800
50
50
Wages Pay.
J J, Cap.
2000
2000
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp.
700
Rent Exp.
200
200
Sup. Exp.
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
1015
2150
4965
2150
4965
12
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Delivery Fees
2,150
Expenses
Wages Expense
700
First amount in the column is shown with a .
13
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Delivery Fees
2,150
Expenses
Wages Expense
700
Rent Expense
200
Supplies Expense
60
Telephone Expense
50
Insurance Expense
25
Depreciation Expense - Delivery Eq.
100
Expenses are listed in either account number
order OR descending order by dollar amount.
14
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Delivery Fees
2,150
Expenses
Wages Expense
700
Rent Expense
200
Supplies Expense
60
Telephone Expense
50
Insurance Expense
25
Depreciation Expense - Delivery Eq.
100
Single underline indicates addition or
subtraction.
15
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Next, expenses are totaled.
Delivery Fees
2,150
Expenses
Wages Expense
700
Rent Expense
200
Supplies Expense
60
Telephone Expense
50
Insurance Expense
25
Depreciation Expense - Delivery Eq.
100
Total Expenses
1,135
16
Jessica Janes Campus DeliveryIncome
StatementFor Month Ended June 30, 20--
Revenues
Delivery Fees
2,150
Expenses
Wages Expense
700
Rent Expense
200
Supplies Expense
60
Telephone Expense
50
Insurance Expense
25
Depreciation Expense - Delivery Eq.
100
Total Expenses
1,135
Net Income
1,015
17
Jessica Janes Campus DeliveryStatement of
Owners EquityFor Month Ended June 30, 20--
Jessica Jane, capital, June 1, 20--
Statement starts with the Capital balance as of
the beginning of the accounting period.
18
Jessica Janes Campus DeliveryStatement of
Owners EquityFor Month Ended June 30, 20--
Jessica Jane, capital, June 1, 20--
2,000
Instead of showing Revenue increasing Expenses
decreasing the Owners Equity, this statement
uses the net effect (Net Income/Loss) from the
Income Statement.
19
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Del. Eq.
3600
3600
100
A. D.-Del Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
2000
2000
J J, Cap.
J J, Drawing
150
150
Del. Fees
2150
2150
Be careful!! Capital from the work sheet may not
be the beginning capital balance. It is the
beginning balance PLUS any additional
investments.
700
Wages Exp
700
Rent Exp
200
200
Sup. Exp
60
60
Tel. Exp
50
50
Ins. Exp
25
25
Depr. Exp
100
100
1135
2150
4965
3950
6100
6100
1015
1015
2150
4965
2150
4965
20
Jessica Janes Campus DeliveryStatement of
Owners EquityFor Month Ended June 30, 20--
Jessica Jane, capital, June 1, 20--
2,000
Since Jessica made no additional investments this
period, we can use the capital balance from
the work sheet.
21
Jessica Janes Campus DeliveryStatement of
Owners EquityFor Month Ended June 30, 20--
Jessica Jane, capital, June 1, 20--
2,000
Next we add in the Net Income/Loss from the
Income Statement or from the work sheet.
22
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Del. Eq.
3600
3600
100
A. D.-Del Eq.
100
Net Income is found in the Income Statement
debit column and the Balance Sheet credit
column.
Accts. Pay
1800
1800
50
50
Wages Pay
2000
2000
J J, Cap
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp
700
Rent Exp.
200
200
Sup. Exp.
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
1015
Net Income
2150
4965
2150
4965
23
Jessica Janes Campus DeliveryStatement of
Owners EquityFor Month Ended June 30, 20--
Jessica Jane, capital, June 1, 20--
2,000
Net Income for June
1,015
Less Withdrawals for June
Now we will go to the work sheet for the Drawing
account.
24
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
2000
2000
J J, Cap.
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp.
700
Rent Exp
200
200
Drawing account tells us the amount of assets
Jessica has withdrawn from business for personal
use.
Sup. Exp
60
60
Tel. Exp
50
50
Ins. Exp
25
25
Depr. Exp
100
100
1135
2150
4965
3950
6100
6100
1015
1015
Net Income
2150
4965
2150
4965
25
Jessica Janes Campus DeliveryStatement of
Owners EquityFor Month Ended June 30, 20--
Jessica Jane, capital, June 1, 20--
2,000
Net Income for June
1,015
150
Less Withdrawals for June
Increase in Capital
865
Jessica Jane, capital, June 30, 20--
2,865
Lastly, we calculate the ending Capital balance
and double rule the statement.
26
FORMS OF BALANCE SHEETS
REPORT FORM
ACCOUNT FORM

• Liabilities and Owners Equity are shown BELOW
  the Asset section.
• This is the form you will see from now on in this
  text.

• Asset section is on the LEFT, Liabilities and
  Owners Equity sections are on the RIGHT.
• This is the form you saw in chapters 2-5.

27
CLASSIFIED BALANCE SHEET

• Similar items are grouped together
• Assets are classified as
• Current Assets
• Property, Plant, and Equipment
• Liabilities are classified as
• Current Liabilities
• Long Term Liabilities

28
CURRENT ASSETS

• Assets (including cash) that will be converted
  into cash or consumed within one year or the
  normal operating cycle, whichever is longer
• Examples
• Cash, Accounts Receivable, Supplies, Prepaid
  Insurance

29
OPERATING CYCLE
The time period required to purchase supplies and
services and convert them back into cash
Provide Services for Cash and On Account
Purchase Supplies and Services
Collect Receivables
Back to Cash
Start with cash
30
PROPERTY, PLANT, AND EQUIPMENT

• Assets that are expected to serve the business
  for many years
• Also called Plant Assets or Long-Term Assets
• Examples
• Land, Buildings, and Equipment

31
CURRENT LIABILITIES

• Liabilities that are due within one year or the
  normal operating cycle of the business, whichever
  is longer
• They will be paid out of current assets.
• Examples
• Accounts Payable
• Wages Payable

32
LONG-TERM LIABILITIES

• Obligations that are not expected to be paid
  within a year and do not require the use of
  current assets
• Also called Long-Term Debt
• Example
• Mortgage on an office building
• Jessica Jane does not have any long-term
  liabilities.

33
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Assets
Current Assets
Current Assets are listed first.
34
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
2000
2000
J J, Cap.
J J, Drawing
150
150
Current Assets
Del. Fees
2150
2150
700
Wages Exp.
700
Rent Exp.
200
200
Sup. Exp
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
1015
Net Income
2150
4965
2150
4965
35
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Assets
Current Assets
Cash
370
Accounts Receivable
650
Supplies
20
Prepaid Insurance
175
Total Current Assets
1,215
Property, Plant, and Equipment
The long-term assets are listed next.
36
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Del. Eq
3600
3600
100
A. D.-Del Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay
2000
2000
J J, Cap
Property, Plant, and Equipment includes the
long-term assets AND their related Accumulated
Depreciation accounts.
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp
700
Rent Exp
200
200
Sup. Exp
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
1015
Net Income
2150
4965
2150
4965
37
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Assets
Current Assets
Cash
370
Accounts Receivable
650
Supplies
20
Prepaid Insurance
175
Total Current Assets
1,215
Property, Plant, and Equipment
Delivery Equipment
3,600
Accumulated Depr. - Delivery Eq.
100
3,500
Book Value
38
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Assets
Current Assets
Cash
370
Accounts Receivable
650
Supplies
20
Now for the Liabilities!!!
Prepaid Insurance
175
Total Current Assets
1,215
Property, Plant, and Equipment
Delivery Equipment
3,600
Accumulated Depr. - Delivery Eq.
100
3,500
Total Assets
4,715
Liabilities
39
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Assets
Current Assets
Cash
370
Just as with assets, the current (or
short-term) are shown first.
Accounts Receivable
650
Supplies
20
Prepaid Insurance
175
Total Current Assets
1,215
Property, Plant and Equipment
Delivery Equipment
3,600
Accumulated Depr. - Delivery Eq.
100
3,500
Total Assets
4,715
Liabilities
Current Liabilities
40
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
2000
2000
J J, Cap.
J J, Drawing
150
150
Del. Fees
2150
2150
Jessica has only two liabilities and they are
both current. Accounts Payable and Wages Payable
700
Wages Exp
700
Rent Exp
200
200
Sup. Exp
60
60
Tel. Exp
50
50
Ins. Exp
25
25
Depr. Exp
100
100
1135
2150
4965
3950
6100
6100
1015
1015
Net Income
2150
4965
2150
4965
41
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Assets
Current Assets
Cash
370
Accounts Receivable
650
Supplies
20
Prepaid Insurance
175
Lets shift to the lower part of our Balance
Sheet.
Total Current Assets
1,215
Property, Plant and Equipment
Delivery Equipment
3,600
Accumulated Depr. - Delivery Eq.
100
3,500
Total Assets
4,715
Liabilities
Current Liabilities
Accounts Payable
1,800
42
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Liabilities
Current Liabilities
Accounts Payable
1,800
Wages Payable
50
Total Current Liabilities
1,850
Owners Equity
Since Jessica does not have long-term
liabilities, we will move on to the Owners
Equity section.
43
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
2000
2000
J J, Cap.
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp.
700
Caution!!! This capital amount does not include
Net Income or Drawing. We must use the June
30th capital amount from the Statement of
Owners Equity.
Rent Exp.
200
200
Sup. Exp.
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
Net Income
1015
2150
4965
2150
4965
44
Jessica Janes Campus DeliveryStatement of
Owners EquityFor Month Ended June 30, 20--
Jessica Jane, capital, June 1, 20--
2,000
Net Income for June
1,015
150
Less Withdrawals for June
Increase in Capital
865
Jessica Jane, capital, June 30, 20--
2,865
This is the amount we will put on the Balance
Sheet.
45
Jessica Janes Campus DeliveryBalance SheetJune
30, 20--
Liabilities
Current Liabilities
Accounts Payable
1,800
Wages Payable
50
Total Current Liabilities
1,850
Owners Equity
Jessica Jane, Capital
2,865
Total Liabilities and Owners Equity
4,715
It Balances!!! Total Assets of 4,715
equals Total Liabilities and Owners Equity of
4,715.
46
CLOSING PROCESS

• Gives temporary accounts zero balances so they
  are prepared to accumulate new information for
  the next accounting period
• Involves four closing journal entries
• Income Summary account is used to aid in the
  closing process.

47
PERMANENT ACCOUNTS

• All accounts reported on the Balance Sheet
• Assets (including contra-assets)
• Liabilities
• Capital account
• Contain the results of all transactions since the
  business started
• NOT CLOSED

48
TEMPORARY ACCOUNTS

• Accumulate information for a specific accounting
  period
• All accounts not on the Balance Sheet
• Revenues
• Expenses
• Drawing
• These accounts are closed.

49
CLOSING ENTRY
Close Revenue Accounts to Income Summary
ENTRY 1
50
ACCOUNT TITLE
ADJ. T. B.
INCOME STMT
BALANCE SHEET
DR.
CR.
DR.
CR.
CR.
DR.
370
Cash
370
Accts. Rec.
650
650
Supplies
20
20
Ppd. Ins.
175
175
Revenue
Del. Eq.
3600
3600
100
A. D.-Del. Eq.
100
Accts. Pay.
1800
1800
50
50
Wages Pay.
J J, Cap.
2000
2000
J J, Drawing
150
150
Del. Fees
2150
2150
700
Wages Exp.
700
Rent Exp.
200
200
Sup. Exp.
60
60
Tel. Exp.
50
50
Ins. Exp.
25
25
Depr. Exp.
100
100
1135
2150
4965
3950
6100
6100
1015
1015
2150
4965
2150
4965
51
CLOSING ENTRY
Close Revenue Accounts to Income Summary
ENTRY 1
DELIVERY FEES
2,150
Bal.
2,150
(1)
To reduce this accounts balance to zero, we
must debit it 2,150.
52
CLOSING ENTRY
Close Revenue Accounts to Income Summary
ENTRY 1
DELIVERY FEES
INCOME SUMMARY
2,150
2,150
(1)
2,150
(1)
We are, in effect, transferring the balance to
the Income Summary account.
53
CLOSING ENTRY
Close Revenue Accounts to Income Summary
ENTRY 1
DELIVERY FEES
INCOME SUMMARY
2,150
Bal.
(1)
2,150
2,150
(1)
0
Lets Journalize this entry!
54
GENERAL JOURNAL
DATE
DESCRIPTION
PR
DEBIT
CREDIT
Closing Entries
1
2
3
4
Instead of an explanation after each closing
entry, Closing Entries is written before the
first entry.
5
6
7
8
9
10
11
55
GENERAL JOURNAL
DATE
DESCRIPTION
PR
DEBIT
CREDIT
Closing Entries
1
20--
2
30
June
Delivery Fees
2150 00
3
Income Summary
2150 00
4
5
6
7
8
9
10
11
56
CLOSING ENTRY
Close Expense Accounts to Income Summary
ENTRY 2
Each expense account is closed in this one
closing entry.
57
Wages Expense
700
700
(2)
Bal.
Expenses have debit balances. Therefore, to
close them, they must be credited.
58
Wages Expense
700
700
(2)
Bal.
0
Wages Expense is now closed the 700 balance
will be transferred to Income Summary along with
the balances of all the other expense accounts.
59
Income Summary
Wages Expense
Rent Expense
700
2,150
700
(2)
200
(2)
1,135
(2)
Bal.
200
Bal.
1,015
Bal.
0
0
Supplies Expense
Telephone Expense
Bal.
Bal.
60
50
60
(2)
50
(2)
0
0
All the expense account balances are
combined and Income Summary is debited for the
total.
Insurance Expense
Depr. Expense - Del. Eq.
100
(2)
Bal.
25
(2)
100
Bal.
25
0
0
60
Income Summary
Wages Expense
Rent Expense
700
2,150
700
(2)
200
(2)
1,135
(2)
Bal.
200
Bal.
1,015
Bal.
0
0
Supplies Expense
Telephone Expense
Bal.
Bal.
60
50
60
(2)
50
(2)
Lets journalize this entry!
0
0
Insurance Expense
Depr. Expense - Del. Eq.
100
(2)
Bal.
25
(2)
100
Bal.
25
0
0
61
GENERAL JOURNAL
This is a compound journal entry.. One debit
which equals the six credits
DATE
DESCRIPTION
PR
DEBIT
CREDIT
Closing Entries
1
20--
2
30
June
Delivery Fees
2150 00
3
Income Summary
2150 00
4
5
Income Summary
30
1135 00
6
Wages Expense
700 00
7
Rent Expense
200 00
8
60 00
Supplies Expense
9
50 00
Telephone Expense
Insurance Expense
25 00
10
Depr. Exp.-Delivery Equip.
100 00
11
62
CLOSING ENTRY
Close Income Summary to Capital
ENTRY 3
REVENUES
INCOME SUMMARY
2,150
63
CLOSING ENTRY
Close Income Summary to Capital
ENTRY 3
INCOME SUMMARY
1,135
2,150
EXPENSES
64
CLOSING ENTRY
Close Income Summary to Capital
ENTRY 3
INCOME SUMMARY
1,135
2,150
1,015
Bal.
The balance in Income Summary is the Net Income.
65
CLOSING ENTRY
Close Income Summary to Capital
ENTRY 3
INCOME SUMMARY
1,135
2,150
(3)
1,015
Bal.
1,015
By debiting Income Summary, we close the account.
66
CLOSING ENTRY
Close Income Summary to Capital
ENTRY 3
INCOME SUMMARY
J. JANE, CAPITAL
1,135
2,150
2,000
Bal.
1,015
(3)
1,015
Bal.
1,015
We transfer the Net Income into the Capital
account.
67
GENERAL JOURNAL continued
DATE
DESCRIPTION
PR
DEBIT
CREDIT
Closing Entries continued
12
20--
13
30
June
Income Summary
1015 00
14
Capital
1015 00
15
16
17
18
19
20
21
22
68
CLOSING ENTRY
ENTRY 4
Close Drawing to Capital
J. JANE, DRAWING
J. JANE, CAPITAL
Bal.
2,000
150
150
(4)
1,015
Bal.
3,015
(4)
150
69
CLOSING ENTRY
ENTRY 4
Close Drawing to Capital
J. JANE, DRAWING
J. JANE, CAPITAL
Bal.
2,000
150
150
(4)
1,015
Bal.
3,015
(4)
150
The Capital account now reflects the ending
balance shown on the Statement of Owners Equity.
Bal.
2,865
70
GENERAL JOURNAL continued
DATE
DESCRIPTION
PR
DEBIT
CREDIT
Closing Entries continued
12
20--
13
30
June
Income Summary
1015 00
14
1015 00
Capital
15
16
150 00
J. Jane, Capital
30
17
J. Jane, Drawing
150 00
18
The Closing Entries are then posted to the
General Ledger accounts.
19
20
21
22
71
FOUR-COLUMN ACCOUNT
401
Account No.
DELIVERY FEES
Account
Closing is written in the Item area.
BALANCE
DATE
ITEM
PR
DR.
CR.
DR.
CR.
20--
J1
6
June
500
500
J1
600
15
1100
30
1050
2150
J2
30
Closing
72
FOUR-COLUMN ACCOUNT
401
Account No.
DELIVERY FEES
Account
BALANCE
DATE
ITEM
PR
DR.
CR.
DR.
CR.
A line is drawn through to signify a zero
balance.
20--
J1
6
June
500
500
J1
600
15
1100
30
1050
2150
J2
30
J4
Closing
2150
73
POST-CLOSING TRIAL BALANCE

• Prepared after closing entries
• To prove the equality of the debit and credit
  balances in the general ledger accounts
• Only accounts which remain open (permanent
  accounts) are listed.

74
Jessica Janes Campus DeliveryPost-Closing Trial
BalanceJune 30, 20--
Account Title
Acct No.
Debit Balance
Credit Balance
Cash
101
370
122
650
Accounts Receivable
Supplies
20
141
145
175
Prepaid Insurance
There are only Permanent accounts on the
Post-Closing Trial Balance.
Delivery Equipment
185
3600
Accumulated Depr.-Delivery Eq.
185.1
100
Accounts Payable
202
1800
Wages Payable
219
50
Jessica Jane, Capital
311
2865
4815
4815
75
ACCOUNTING CYCLE

• Analyze source documents.
• Journalize the transaction.
• Post to the ledger accounts.
• Prepare a trial balance.
• Determine and prepare the needed adjustments on
  the work sheet.

76
ACCOUNTING CYCLE cont.

• Complete an end-of-period work sheet.
• Prepare an income statement, statement of owners
  equity, and balance sheet.
• Journalize and post the adjusting entries.
• Journalize and post the closing entries.
• Prepare a post-closing trial balance.