Accounting Chapter 4 Notes

Accounting Chapter 4 Notes

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Unformatted text preview: zero via the income summary account. This closing entry transfers total revenues to the credit side of the Income Summary account 2. Make expense accounts equal zero via the Income summary account. This closing entry transfers total expenses to the debit side of the Income summary account. The income summary account now holds the net income or net loss of the period 3. Make the Income summary account equal zero via the retained earnings account. This closing entry transfers net income to Retained earnings 4. Make the dividends account equal zero via the Retained Earnings account. This entry transfers dividends to the debit side of Retained Earnings. PG k- 241 Journalizing Closing Entries Date Accounts Debits Credit May 31 Service Revenue 7,600 Income Summary 7,600 31 Income Summary 3,900 Rent Expense 1,000 Salary Expense 1,800 Supplies Expense 100 Depreciation expense- furniture 300 Depreciation expense - Building 200 Interest Expense 100 Utilities expense 400 31 Income Summary (7,600- 3,900) 3,700 Retained Earnings 3,700 31 Retained Earnings 1,000 Dividends 1,000 Post- Closing Trial Balance - The accounting cycle can end with a post- closing trail balance - Key Takeaway: The post- closing trail balance contains the same accounts that the balance sheet contains- assets, liabilities, common stock, and retained earnings - Only assets, liabilities, Common stock, and retained earnings accounts appear on the post- closing trail balance. No temporary accounts...
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This note was uploaded on 04/08/2014 for the course ECON 121 taught by Professor Ronald during the Spring '11 term at UMBC.

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