Chapter 8
Accounting
February 2014
Recording Adjusting and
Closing Entries for a Service
Business
Warm Up
 The
Walt Disney Company
 What
do you think of when you hear the word
DISNEY?
 How
many of you think of the environment when
you hear the word Disney?
Warm Up
 The
Walt Disney Company
In 1990, the WDC introduced an
Initiative called “Environmentality.”
Definition-A fundamental ethic that
blends business growth with the
conservation of natural resources.
Warm Up
 The
Walt Disney Company
Environmentality goes beyond just
complying laws. It includes
purchasing recycled products,
waste minimization , resource
conservation, research and
development, community
involvement and education.
Warm Up
 The
Walt Disney Company
It’s a success!!! A 2011 report on
the water usage at the Animal
Kingdom stated that 145,000,000
gallons of water was saved just by
having employees monitor their
usage.
So here is my question for
you!
Warm Up
 The
Walt Disney Company
List at least two reasons why you
think the WDC would be interested
in such environmental measures?
If the WDC purchased equipment
to help measure water usage,
would that equipment be classified
as an asset, liability, or owner’s
equity on the balance sheet?
Why?
Warm Up
 The
Walt Disney Company
List at least two reasons why you
think the WDC would be interested
in such environmental measures?
WDC could generally be concerned
about the environment and believe
that business has a responsibility
to do what it can to conserve
natural resources.
Warm Up
 The
Walt Disney Company
List at least two reasons why you
think the WDC would be interested
in such environmental measures?
Could be that good use of natural
resources can result in cost
savings for the company. A
company also might think that its
customers expect the company to
protect the environment.
Warm Up
 The
Walt Disney Company
If the WDC purchased equipment
to help measure water usage,
would that equipment be classified
as an asset, liability, or owner’s
equity on the balance sheet?
Why?
Equipment to help measure water
usage would be classified as an
asset because it is something of
value owned by the company
Internet Research Activity
 Go
to the homepage for a company
or corporation of your choice.
Search the site for the most recent
annual report. Go to the income
statement.
Looking at the categories of
Revenues on the income statement,
List the accounts that may be
Included in the company’s entry to
close the revenue accounts.
Internet Research Activity
Answers
should vary here, but
all answers should include the
Income Summary account
along with a variety of
appropriate revenue accounts.
•
•
•
Chapter 8 presents journalizing
adjusting entries for a service
business organized as a
proprietorship.
Adjusting entries play an
important role in the accounting
cycle.
Journalizing closing entries is
also covered in this chapter.
Preview
Chapter 8.1
Objectives
Objectives for Chapter 8.1

Define Accounting Terms related to adjusting
entries for a service business organized as a
proprietorship.

Identify accounting concepts and practices
related to adjusting entries for a service
business organized as a proprietorship.

Record adjusting entries for a service business
organized as a proprietorship.
REMEMBER…
 The
balance in an account is changed by
journalizing
 a transaction and posting the entry to the
account.
 When we prepared the worksheet, we
only planned
 The adjusting entries. NO account
balances have
 Been changed.
Terminology 8.1
Adjusting
Entries- journal entries
recorded to update general
ledger accounts at the end of
a fiscal period. (p. 202)
Let me Explain…
•
You do not have to decide the
debit and credit parts of the entry.
The analysis was done when the
worksheet was completed.
•
All that needs to be done at this
point is to record the entry in the
journal. T accounts are given so
that you can visualize the effect of
the entry on accounts.
Let me Explain…
 There
are no documents associated
with adjusting entries, therefore the
doc No. column is left blank.
 The entry must be posted to the
general
 Ledger accounts before the account
balance changes.
 Once the entry is posted, the supplies
 account balance will reflect the
amount of supplies on hand at the
end of the period.
19
ADJUSTING ENTRY FOR SUPPLIES
page 202
1
3
2
1. Write the heading.
2. Write the date.
3. Write the title of
the account
debited. Record
the debit amount.
4. Write the title of
the account
credited. Record
the credit amount.
4
LESSON 8-1
Adjusting Entry for Prepaid Insurance
page 204
1. Write the date.
2. Write the title of
the account
debited. Record
the debit amount.
3. Write the title of
the account
credited. Record
the credit amount.
2
1
3
20
LESSON 8-1
21
page 205
TERM REVIEW
 Adjusting
entries- journal entries recorded
to update general ledger accounts at the
end of a fiscal period. (p. 202)
 Try
Aplia-Work Together & On Your Own
 Application Problem
 Character Counts
 Can I Say this on My Resume?
LESSON 8-1
Exit Ticket
1.
2.
3.
Why are Adjusting Entries Journalized?
Where is the information obtained to
journalize adjusting entries?
What account are increased from
zero balances after adjusting entries
for supplies and prepaid insurance
are journalized and posted?