Bad Debt Expense 1600 Oct 31 Allowance for doubtful accounts 1600 Debit Credit

Bad debt expense 1600 oct 31 allowance for doubtful

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Bad Debt Expense 1,600 Oct. 31 Allowance for doubtful accounts 1,600 Debit Credit Accounts Receivable 72,000 2,000 Adj. 1/10
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3-78 Shows the balance of all accounts, after adjusting entries, at the end of the accounting period. 5. Adjusted Trial Balance
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6. Preparing Financial Statements Financial Statements are prepared directly from the Adjusted Trial Balance. Statement of Financial Position Income Statement Retained Earnings Statement Think! What would prevent companies from preparing & publishing financial statements 24/7 (on-demand)?
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3-80
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3-81
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7. Closing Entries To reduce the balance of the income statement ( revenue and expense ) accounts to zero. To transfer net income or net loss to equity. Statement of financial position ( asset , liability , and equity ) accounts are not closed. Dividends are closed directly to the Retained Earnings account. Think! Why do we close some accounts and leave other permanent?
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3-83 7. Closing Entries
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3-84 Illustration 3-37
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3-85 8. Post-Closing Trial Balance
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3-86 9. Reversing Entries After preparing the financial statements and closing the books, a company may reverse some of the adjusting entries before recording the regular transactions of the next period.
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3-87 Accounting Cycle Summarized 1. Enter the transactions of the period in appropriate journals. 2. Post from the journals to the ledger (or ledgers). 3. Take an unadjusted trial balance (trial balance). 4. Prepare adjusting journal entries and post to the ledger(s). 5. Take a trial balance after adjusting (adjusted trial balance). 6. Prepare the financial statements from the adjusted trial balance. 7. Prepare closing journal entries and post to the ledger(s). 8. Take a trial balance after closing (post-closing trial balance). 9. Prepare reversing entries (optional) and post to the ledger(s).
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Financial Statements for a Merchandising Company
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3-89 Financial Statements of a Merchandising Company
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