At the end of a fiscal year, a company performs an accounting procedure known as year-end close, or a closing of the books. A. As part of the procedure, a company will record journal entries that transfer all account balances from its income statement to the balance sheet, leaving all income and expense accounts with a zero balance at the start of the new fiscal year. Visit the Bookstore. (b) Supplies used, $300. Closing journal entries are made at the end of an accounting period to prepare temporary accounts for the next period.. Please journalize the following adjustments of Air & Sea Travel, Inc., at April 30 and post them to the ledger: (a) Prepaid rent expired, $1.000. Additional Resources . Accounting College Accounting, Chapters 1-27 CLOSING ENTRIES (NET LOSS) Using the following partial listing of T accounts, prepare closing entries in general journal form dated January 31, 20--. Illustrative Entries. You can purchase the solutions manual in the bookstore. Temporary accounts include: Revenue, Income and Gain Accounts; Expense and Loss Accounts The closing entries are the journal entry form of the Statement of Retained Earnings. Closing entries occur at the end of the accounting cycle as well. EXERCISE 6 – ADJUSTMENT ENTRIES . After the closing entries have been posted to the general ledger, the balance of the capital account now reflects the net income (or loss) and the deduction of any withdrawals from the business. The financial year of the business closes at the end of December every year. (d) Accrued salary expense, $950. (c) Depreciation on furniture, $275. Rather, we want that account to … Closing entries are journal entries made at the end of an accounting period which transfer the balances of temporary accounts to permanent accounts. These entries are made in order to prepare for a new accounting cycle. Adjusted trial balance and closing entries of Business Consulting Company are given below: * $82,500 – $64,500. Quick Question On Closing Journal Entries Use the following information to make all the September 30 Closing Entries required by ABC Company to prepare for the next accounting cycle. Journal entries to record inventory transactions under a periodic inventory system Presentation of Financial Statements, Discontinued Operations, ASC 205 Journal entry to record the collection of accounts receivable previously written-off Closing entries are based on the account balances in an adjusted trial balance.. Then post the closing entries to the T accounts. True. B. This amount is accrued at the end of December 2018 and not paid. The company has employed staff in the mid of December, for which salary amounting to $4,200. The pdf version of the solutions manual also includes links to the video solutions. For example, we do not want to carry over the amounts in cost of goods sold expense account into the next cycle. False. Example. Required: Using the information from adjusted trial balance and closing entries given above, prepare post-closing trial balance of Business Consulting Company. The closing process reduces revenue, expense, and dividends account balances (temporary accounts) to zero so they are ready to receive data for the next accounting period. 20. This is becaues temporary or nominal accounts, (also called income statement accounts), are measured periodically; and so, the amounts in one accounting period should be closed or brought to zero so that they won't get mixed with those of the next period. Which of the following accounts is NOT closed at the end of the accounting period: A. Accountants may perform the closing process monthly or annually. Example of Reversing Entries. We can take the example of Mr. Daniel, who has an established company of electronics. (e) Accrued service revenue, $250.