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Closing Entries for Income Statement Accounts: A Comprehensive Guide

This lesson explores the process of recording closing entries for income statement accounts, including the Income Summary account. It details procedures for closing accounts with both credit and debit balances and explains the journal entries required for these transitions. Additionally, it covers the steps to record net income and dividends, along with practical examples to illustrate the closing process. Whether you are a student or professional, this guide provides essential knowledge for accurately managing financial records.

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Closing Entries for Income Statement Accounts: A Comprehensive Guide

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  1. LESSON 16-2 Recording Closing Entries for Income Statement Accounts

  2. THE INCOME SUMMARY ACCOUNT page 487 LESSON 16-2

  3. 3 3 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES page 488 1 2 4 1. Heading 3. Debits to close 2. Date 4. Credit to Income Summary LESSON 16-2

  4. 3 3 CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 489 1. Date 2. Account debited 3. Credits to close 4. Debit amount 1 2 4 LESSON 16-2

  5. Purchases Bal. 209,960.00 Closing 209,960.00 (New Bal. zero) Income Summary Adj. (mdse. inv.) 15,840.00 Closing (credit amounts) 500,253.10 Closing (debit accounts) 404,099.15 (New Bal. 80,313.95) SUMMARY OF CLOSING ENTRY FOR INCOME STATEMENT ACCOUNTS WITH DEBIT BALANCES page 490 LESSON 16-2

  6. CLOSING ENTRY TO RECORD NET INCOME page 491 1 2 3 1. Date 2. Debit Income Summary 3. Credit Retained Earnings LESSON 16-2

  7. CLOSING ENTRY FOR DIVIDENDS page 491 1 2 3 1. Date 2. Debit Retained Earnings 3. Credit Dividends LESSON 16-2

  8. COMPLETED CLOSING ENTRIES FOR A CORPORATION RECORDED IN A JOURNAL page 492 LESSON 16-2

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