Lecture 5 Week 6

14 940 closingent20 500 total 2

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Unformatted text preview: nts closed to P or L summary – Debit P or L summary – Credit expense 8 2 4/04/2013 THE CLOSING PROCESS Expenses 3. Profit or Loss Summary balances to determine profit/loss then closed to capital Total Income 14 940 Closing Ent. 14 940 Closing Ent. 20 500 Total 2 – Debit P or L summary (assuming a profit) – Credit capital account 20 500 1 Profit or Loss Summary Expense 14 940 Income 20 500 Closing Ent. 5 560 20 500 20 500 4. Drawings closed to capital Expense Payable – Debit capital account – Credit drawings account Balance 1 200 Closing Ent. 1 200 9 ACCOUNT BALANCES AFTER THE CLOSING PROCESS 3 Capital Closing Ent. 1 200 Balance 240 000 4 Bal. c/d 244 560 Close Ent. 5 560 (Profit) 245 560 245 560 10 Bal. b/d 244 360 THE POST‐CLOSING TRIAL BALANCE All income accounts have nil balances All expense accounts have nil balances The drawings account has a nil balance The capital account has either been – increased by the profit, or – decreased by the loss • an...
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This document was uploaded on 03/24/2014.

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