LESSON 22-4
Adjusting, Closing, and
Reversing Entries for a
Corporation
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
ADJUSTING ENTRIES
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 654
LESSON 22-4
3
CLOSING ENTRY FOR ACCOUNTS
WITH CREDIT BALANCES
page 655
1
2
1. Enter the balance of accounts in the Income Statement credit
column as a debit.
2. Enter the total of the debit entries as a credit to Income Summary.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-4
4
CLOSING ENTRY FOR ACCOUNTS
WITH DEBIT BALANCES
1
3
2
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 656
1. Enter the account
title Income
Summary.
2. Enter the balance
of every account
in the Income
Statement debit
column as a
credit.
3. Enter the total of
the credit entries
as a debit to
Income Summary.
LESSON 22-4
5
CLOSING ENTRY TO RECORD
NET INCOME
page 657
1
2
1. Debit Income Summary.
2. Credit Retained Earnings.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-4
6
CLOSING ENTRY FOR DIVIDENDS
page 657
1
2
1. Debit Retained Earnings.
2. Credit Dividends.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-4
7
REVERSING ENTRIES
page 658
1. Reverse the entry that
created a balance in
Interest Receivable.
2. Reverse the entry that
created a balance in
Interest Payable.
3. Reverse the entry that
created a balance in
Federal Income Tax
Payable.
1
2
3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-4
8
ACCOUNTING CYCLE FOR A MERCHANDISING
BUSINESS ORGANIZED AS A CORPORATION
2
1
3
4
page 659
1. Source documents are
checked for accuracy, and
transactions are analyzed into
debit and credit parts.
2. Transactions, from information
on source documents, are
recorded in journals.
3. Journal entries are posted to
the accounts payable,
accounts receivable, and
general ledgers.
4. Schedules of accounts
payable and accounts
receivable are prepared from
the subsidiary ledgers.
(continued on next slide)
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-4
9
ACCOUNTING CYCLE FOR A MERCHANDISING
BUSINESS ORGANIZED AS A CORPORATION
9
8
5
7
page 659
5. A work sheet, including a trial
balance and an adjustment for
federal income tax expense, is
prepared from the general
ledger.
6. Financial statements are
prepared from the work sheet.
7. Adjusting and closing entries are
journalized from the work sheet
and posted to the general ledger.
8. A post-closing trial balance of the
general ledger is prepared.
9. Reversing entries are journalized
and posted to the general ledger.
6
(continued from previous slide)
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-4