LESSON 4-5
End-of-Period Work for a
Departmentalized Business
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
JOURNALIZING ADJUSTING ENTRIES FOR
A DEPARTMENTALIZED BUSINESS
page 118
Journal entries recorded to update general
ledger accounts at the end of a fiscal
period are called adjusting entries.
Account balances are changed only by
posting journal entries to the general
ledger accounts
Adjusting entry journal entries are found in
the adjustments column of the expanded
worksheet.
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
JOURNALIZING ADJUSTING ENTRIES
FOR A DEPARTMENTALIZED BUSINESS
1
2
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 118
1. Write Adjusting
Entries in the Account
Title column. This
heading identifies the
group of adjusting
entries
2. Enter the adjusting
entries without
additional
explanation. Adjusting
entries do not have a
source document
Modified by D. Burns West Johnston High School
JOURNALIZING CLOSING ENTRIES FOR A
DEPARTMENTALIZED BUSINESS
page 119
Journal entries used to prepare temporary
accounts for a new fiscal period are called
closing entries.
The information to journalize closing
entries is obtained from the Departmental
Margin Statements and the Income
Statement columns of the worksheet.
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
EXPLANATION OF CLOSING ENTRIES
page 119
At the end of each fiscal period, businesses
record four closing entries:
1. Closing entry for income statement accounts with credit
balances (revenue & contra cost accounts)
2. Closing entry for income statement accounts with debit
balances (cost, contra revenue, and expense accounts)
3. Closing entry to record net income or net loss in the
retained earnings account & to close the income
summary account
4. Closing entry for the dividends account
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
JOURNALIZING CLOSING ENTRIES FOR
A DEPARTMENTALIZED BUSINESS
page 119
1
2
3
1. Write Closing Entries in Account Title column.
2. Record entry to close income statement accounts with
credit balances.
3. Write (continued on general journal page 15) to show
that the closing entries are continued.
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
JOURNALIZING CLOSING ENTRIES FOR
A DEPARTMENTALIZED BUSINESS
page 120
4. Write Closing
Entries (continued)
in the Account Title
column.
4
5. Record entry to
close income
statement accounts
with debit balances.
5
6
7
CENTURY 21 ACCOUNTING © Thomson/South-Western
6. Record entry to
close Income
Summary to
Retained Earnings.
7. Record entry for
Dividends.
Modified by D. Burns West Johnston High School
POST CLOSING TRIAL BALANCE FOR A A
DEPARTMENTALIZED BUSINESS
page 122
A trial balance prepared after the
closing entries are posted is called a
post-closing trial balance
A post closing trial balance proves
that debits and credits are still equal
after the adjusting and closing entries
have been posted.
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
POST-CLOSING TRIAL BALANCE FOR
A DEPARTMENTALIZED BUSINESS
page 122
 Post closing trial balance
contains only the permanent
account balances.
 Temporary accounts were
closed with the closing
entries and have a zero
balance.
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
SUMMARY OF ACCOUNTING CYCLE
1.
2.
3.
4.
1
2
9
5.
3
6.
5
8
4
7.
8.
6
7
9.
page 123
Verify source documents for accuracy.
Record entries in journals.
Post journal entries to the ledgers.
Prepare interim departmental
statement of gross profit.
Prepare schedules of accounts
receivable and accounts payable from
the subsidiary ledgers.
Prepare a trial balance on the work
sheet.
Prepare financial statements.
Journalize and post adjusting and
closing entries.
Prepare a post-closing trial balance.
The series of accounting activities included in recording financial information for a
fiscal period is called an accounting cycle.
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School
TERMS REVIEW




page 117
adjusting entries
closing entries
post-closing trial balance
accounting cycle
CENTURY 21 ACCOUNTING © Thomson/South-Western
Modified by D. Burns West Johnston High School