Adjusted Trial Balance At Cash Accounts Receivable Supplies

Adjusted trial balance at cash accounts receivable

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Adjusted Trial Balance At September 30, 2018 Cash Accounts Receivable Supplies Prepaid Rent Equipment Accumulated Depreciation Software Accumulated Amortization Logo and Trademarks Accounts Payable Deferred Revenue Salaries and Wages Payable Income Tax Payable Interest Payable Note Payable Common Stock Retained Earnings Dividends Sales Revenue Service Revenue Salaries and Wages Expense Rent Expense Utilities Expense Advertising Expense Depreciation Expense Supplies Expense Amortization Expense Interest Expense Income Tax Expense Total Debit $ 16,900 3,750 250 4,800 9,600 9,000 300 0 9,750 2,400 600 500 400 350 250 100 200 $ 59,150 Credit $ 400 250 10,700 200 1,950 200 100 20,000 10,000 0 12,100 3,250 $ 59,150 $9,600 (400) 9,000 (250) Financial Statements, continued
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Learning Objective 4-5 Explain the closing process.
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Closing Temporary Accounts Transfer net income (or loss) and dividends to Retained Earnings. Establish zero balances in all income statement and dividend accounts.
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Temporary accounts track financial results for a limited period of time. Temporary accounts track financial results for a limited period of time. Closing Temporary Accounts Revenues E x p e n s e s Dividends Temporary Accounts Permanent Accounts Assets L i a b i l i t i e s Equity Permanent accounts track financial results from year to year. Permanent accounts track financial results from year to year. 4-38
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Relationships Among the Financial Statements On October 1, 2015 (start of the next year): How much is in revenues & expenses? How much is in beginning retained earnings? NOODLECAKE, Inc. Income Statement For the Month Ended September 30, 2018 Revenues Sales Revenue Service Revenue Total Revenues Expenses Salaries and Wages Expense Rent Expense Utilities Expense Depreciation Expense Supplies Expense Advertising Expense Amortization Expense Interest Expense Income Tax Expense Total Expenses Net Income $12,100 3,250 15,350 9,750 2,400 600 500 400 350 250 100 200 14,550 $ 800 NOODLECAKE, Inc. Statement of Retained Earnings For the Month Ended September 30, 2018 Retained Earnings, September 1 Add: Net Income Subtract: Dividends Retained Earnings, September 30 $ 0 800 (0) $ 800
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Where we are going This is what we want our trial balance to look like. Temporary accounts = $0 Beginning Retained Earnings = PY Ending Retained Earnings How do we achieve this?
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Two closing journal entries are needed. Closing Temporary Accounts Debit Revenue accounts and credit Expense accounts. Debit or credit the difference to Retained Earnings. Credit Dividends Declared and debit Retained Earnings. Debit Revenue accounts and credit Expense accounts. Debit or credit the difference to Retained Earnings. Credit Dividends Declared and debit Retained Earnings. 4-41
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Sales Revenue (-R) Service Revenue (-R) Salaries and Wages Expense (-E) Rent Expense (-E) Utilities Expense (-E) Advertising Expense (-E) Depreciation Expense (-E) Supplies Expense (-E) Amortization Expense (-E) Interest Expense (-E) Income Tax Expense (-E) Retained Earnings (+SE) 9,750 2,400 600 500 400 350 250 100 200 800 12,100 3,250 Retained Earnings (-SE) Dividends (-D) xx xx NOODLECAKE, INC.
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