Chapter 8 - Closing Entries (Net Loss)

Acct. Account Title Debit Credit

No.
101 Cash 28,450.00
102 Accounts Receivable 65,000.00
102-A Allow. for Bad Debts 1,500.00
103 Prepaid Insurance 120,000.00
104 Supplies 12,500.00
120 Equipment 120,000.00
120-A Accumulated Depreciation – Equipment 5,000.00
121 Furniture & Fixtures 85,000.00
121-A Accumulated Depreciation - Furniture 8,750.00
201 Accounts Payable 137,600.00
202 Notes Payable -12% 60,000.00
301 Miley, Capital 252,570.00
302 Mile, Personal 5,000.00
401 Service Fees Revenue 204,755.00
501 Salaries Expense 75,000.00
502 Utilities Expense 55,725.00
503 Gasoline and oil 5,600.00
504 Rent Expense 77,000.00
505 Interest Expense 900.00
TOTAL 670,175.00 670,175.00

Step 1: To record closing entry of income accounts:

31-Dec Service Fees Revenue 204,755
Income Summary 204,755

Step 2: To record closing entry of expense accounts:

31-Dec Income Summary 204,755
Salaries Expense 75,000
Utilities Expense 55,725
Gasoline and Oil 5,600
Rent Expense 77,000
Interest Expense 900
My Note: Kung ano yung total ng expense yun yung ilalagay sa Income Summary

Step 3: To record closing entry of the Income Summary Account:

INCOME SUMMARY
CE2 214,225 204,775 CE1
9,479
9,470 CE3
- End. Bal.

31-Dec Miley, Capital 9,470 = Capital is DECREASED

Income Salary 9,470
My Note: Pag yung total ay nasa DEBIT side ibig sabihin ay NET LOSS
 Chapter 8 - Closing Entries (Net Income)
Income Accounts 150,000.00 credit
Expense Accounts 125,000.00 debit
Not Income (Loss) 25,000.00

Drawing Account 10,000.00

Step 1: To record closing entry of Income Account:

31-Dec Income Accounts 150,000
Income Summary 150,000

Step 2: To record closing entry of Expense Account:

31-Dec Income Summary 125,000
Expense Accounts 125,000

Step 3: To record closing entry of the Income Summary Account:

INCOME SUMMARY
CE2 125,000 150,000 CE1
25,000
CE3 25,000.00
End. Bal. -

31-Dec Income Summary 25,000

Owner, Capital 25,000 = Capital is DECREASED
My Note: Pag yung total ay nasa CREDIT side ang ibig sabihin ay NET INCOME

Step 4: To record closing entry of the Drawing / Withdrawal Account:

31-Dec Owner, Capital 10,000 = Capital is DECREASED
Owner, Drawing 10,000

TIPS:

If the Income Summary Account has a DEBIT = NET LOSS Based on T-

balance before closing it against the capital account, Account
then the result of the operation is?
If the Income Summary Account is CREDITED = NET LOSS Based on the
against the capital account, then the result of the Closing Entry
operation is?

If the Income Summary Account has a CREDIT = NET Based on T-

balance before closing it against the capital account, INCOME Account
then the result of the operation is?
If the Income Summary Account is DEBITED against = NET Based on the
the capital account, then the result of the operation INCOME Closing Entry
is?