MABINI COLLEGES, INC.

,
DAET, CAMARINES NORTE
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY

Advanced Fundamentals of Accounting

AFA

SUGGESTED HANDOUT NUMBER 9

CLOSING ENTRIES, POST-CLOSING TRIAL BALANCE & REVERSING ENTRIES

Closing entries are done to close all nominal or temporary accounts. Review lang tayo, ang nominal
accounts ay ang mga accounts na makikita sa INCOME STATEMENT. Dapat pagdating ng year end
close na sya at zero balance dahil ibang taon na income at expenses sa sunod na taon. Kapag hindi ka
nag closing entries, magkakaroon ng violation of standards ang business.

Guidelines in making closing entries:

1. Una dapat mong i-close ang lahat ng expenses. Papano? Ang normal balance ng expenses ay
DEBIT, so para mag close gagawin mo lang na CREDIT:

Income Summary xx
Expenses xx
2. Pangalawa, dapat mong i-close ang lahat ng income. Papano? Ang normal balance ng income ay
CREDIT, so para mag close gagawin mo lang na DEBIT.

Income xx
Income Summary xx
3. Once na closed na ang income at expense, iko-close mo naman ngayon ang income summary sa
drawing account. Depende sa balance ng income summary.

Kapag debit balance ang income summary, ito ang entry para maclose. Since debit ang income
summary balance kailangan mong i-credit.

Drawing xx
Income Summary xx

Kapag credit balance ang income summary, ito ang entry para maclose. Since credit ang income
summary balance, kailangan mong i-debit:

Income Summary xx
Drawing xx

4. Kapag close na ang income summary, you need to close the drawing account naman sa capital
account.

Kapag after closing ng income summary ang balance ng drawing is debit, para magclose ang
drawing, ito ang entry:

Capital xx
Drawing xx
Kapag after closing ng income summary ang balance ng drawing is credit, para ma close ang
drawing, ito ang entry:

Drawing xx
Capital xx

5. Tapos na ang closing process.

To illustrate let us continue the discussion on the XXX Delivery Service.

 ADVANCED FUNDAMENTALS OF ACCOUNTING MON-SAT 1:00-5:30PM
SUMMER CLASS 2020

Unadjusted Trial Adjusting Entries Adjusted Trial Income Statement

Balance Balance
Dr Cr Dr Cr Dr Cr Dr Cr
45,000 45,000
156,000 156,000
360,000 360,000
63,000 (a)42,000 21,000
300,000 300,000
1,590,000 1,590,000
on-Bldg. 254,000 (c)38,000 292,000
2,150,000 2,150,000
on-Equip. 612,000 (c)123,000 735,000
213,000 213,000
me 450,000 (b)150,000 300,000
2,655,000 2,655,000
600,000 600,000
2,108,000 (b)150,000 2,258,000 2,258,000
875,000 (d)14,000 889,000 889,000
116,000 (f)26,000 90,000 90,000
37,000 37,000 37,000
e (a)42,000 42,000 42,000
(c)161,000 161,000 161,000
(d)14,000 14,000
(e)24,400 24,400
(e)24,400 24,400 24,400
(f)26,000 26,000
nse (g)3,120 3,120 3,120
Accounts (g)3,120 3,120

6,292,000 6,292,000 420,520 420,520 6,494,520 6,494,520 1,222,120 2,282,400

1,060,280
6,292,000 6,292,000 420,520 420,520 6,494,520 6,494,520 2,282,400 2,282,400
XXX DELIVERY SERVICE
WORKSHEET
DECEMBER 31, 2019

XEREZAGURASINGSON,CPA Iamchavit@gmail.com 09508092173

 MABINI COLLEGES, INC.,
DAET, CAMARINES NORTE
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY

Advanced Fundamentals of Accounting

AFA

So sa closing entries wag mona pakialaman ang column 1,2,3,4,5,6,9, at 10. Ang titingnan mo lang is ung
column 7 at 8 dahil yan lang naman ang mga nominal accounts.

Closing entries are as follows:

1. Closing of Expenses:

Income Summary 1,222,120

Salaries Expense 889,000
Repairs Expense 90,000
Miscellaneous Expense 37,000
Office Supplies Expense 42,000
Depreciation Expense 161,000
Doubtful Accounts Expense 3,120
To close the expenses

2. Closing of income

Delivery Income 2,258,000

Interest Income 24,400
Income Summary 2,282,400
To close the income

3. Determine the balance of income summary. Since the income summary has a debit of 1,222,120 as per
closing of expenses and income summary has a balance of 2,282,400 as per closing of income.
Compare it. 2,282,400-1,222,120=1,060,280. Ang tanong saan side mo siya ilalagay? Since mas
malaki ang credit which is 2,282,400, therefore ang balance ni income summary is 1,060,280 credit. At
para magclose ito need mong i-debit:

Income Summary 1,060,280

XXX, Drawing 1,060,280
To close income summary

4. Since the income summary is already close, kailangan mo ng isara ang drawing account. Tingnan mo
ang balance ng drawing account kung debit ba o credit. Sa worksheet may balance ang drawing ay
debit 600,000 pero sa closing entries nagkaroon sya ng credit na 1,060,280. So ano ang magigin
balance nya? Edi i-compare mo ulit, 1,060,280-600,000=460,280. Anong mangyayari sa 460,280? Edi
sympre sa credit kasi mas malaki ung balance nya sa credit. Para i-close ang drawing account, since
credit sya gagawin mong debit:

XXX, Drawing 460,280

XXX, Capital 460,280
To close drawing account

POST-CLOSING TRIAL BALANCE-it is done after the closing entries are made. This shows the equality of
debit and credit before the start of new period. This is an optional step in accounting cycle. Pwedeng gawin or
hindi depende sa trip mo or sa trip ng boss mo.

To further illustrate the post-closing trial balance, let us continue the XXX Delivery Service.

Sa paggawa ng trial post-closing trial balance, ang titingnan mo nlng is ung balance sheet, pero aabangan mo
ung capital at drawing Bakit? Kasi ung drawing is close na so dapat wala ng mag appear sa post-closing trial
balance at adjusted capital nalang ang dapat mong ilagay.
ADVANCED FUNDAMENTALS OF ACCOUNTING MON-SAT 1:00-5:30PM
SUMMER CLASS 2020

XXX DELIVERY SERVICE

POST-CLOSING TRIAL BALANCE
DECEMBER 31, 2019

Accounts Dr. Cr.

Cash 45,000
Accounts Receivable 156,000
Allowance for Doubtful Accounts 3,120
Notes receivable 360,000
Interest Receivable 24,400
Supplies 21,000
Prepaid repairs 26,000
Land 300,000
Building 1,590,000
Accumulated Depreciation-Bldg 292,000
Equipment 2,150,000
Accumulated Depreciation-Equipment 735,000
Accounts Payable 213,000
Unearned Delivery Income 300,000
Salaries Payable 14,000
XXX, Capital 3,115,280
TOTAL 4,672,400 4,672,400
======= ========

Analysis:
1. Pansinin mo may heading nanaman ha. Alam mo nay an hehe.
2. Iba ang TRIAL BALANCE sa FINANCIAL POSITION, tingna mo ang pagkakaiba.
3. As you can notice, wala kang makikitang nominal accounts dahil close na pati ang drawing accounts
4. Mapapansin mo na ang capital na nakalagay dito ay ung capital na computed mo doon sa statement of
changes in equity. So pag mali ka doon, hanggang dito mali ka.

REVERSING ENTRIES-Ginagawa naman ito at the start of the next accounting period. Ang dahilan is para
mag close naman ung mga adjusting entries na requiring reversing entries. The reversing entries is an optional
step in accounting cycle. Pwede mo syang gawin or hindi.

What are the adjusting entries subject to reversing entries?

1. Deferrals using income method
2. Deferrals using expense method
3. Accruals of Income
4. Accruals of Expense

Yan lang pong apat. Kaya tandaan niyo yan.

Guidelines in Making Reversing entries:

1. Alamin mo ung mga adjusting entries subject to reversing entries
2. Once na alam mona literal na baliktarin mo lang ung entry.

To illustrate the reversing entries, let us have the XXX Delivery Service and its adjusting entries:

XEREZAGURASINGSON,CPA Iamchavit@gmail.com 09508092173

ADVANCED FUNDAMENTALS OF ACCOUNTING MON-SAT 1:00-5:30PM
SUMMER CLASS 2020

Eto po ung adjusting entries na nasa handout number 6:

Adjusting entries
a. Office Supplies Expense 42,000
Office Supplies 42,000
b. Unearned Delivery Income 150,000
Delivery Income 150,000
c. Depreciation Expense 161,000
Accumulated Depreciation-Building 38,000
Accumulated Depreciation-Equipment 123,000
d. Salaries Expense 14,000
Salaries Payable 14,000
e. Interest Receivable 24,400
Interest Income 24,000
(360,000x20%x122/360)
f. Prepaid Repairs 26,000
Repairs Expense 26,000
g. Doubtful Accounts Expense 3,120
Allowance for Doubtful Accounts 3,120

Step 1. Piliin ang subject for reversing entries.

Ang adjusting entries a, b,c,at g ay hindi po subject sa depreciation bakit:

1. Ang adjusting entry A is gumamit ng asset method;
2. Ang adjusting entry B is gumamit ng liability method;
3. Ang adjusting entry C ay depreciation
4. Ang adjusting entry G ay allowance for doubtful accounts.

So ang subject for reversing entries lang ay D, E at F.

Step 2: Reverse the entries

D. Salaries Payable 14,000

Salaries Expense 14,000
E. Interest Income 24,400
Interest Receivable 24,400
F. Repairs Expense 26,000
Prepaid Repairs 26,000

Kung mapapansin niyo, literal na binaliktad lang ang adjusting entries pag dating sa reversing entries. Dapat
lang ang gawin mo is alamin ang mga adjusting entries subject to reversing entries. Hindi mo naman pwedeng
ireverse lahat dahil sa assignment or exam, correct minus wrong kaya wala rin magagawa ang pagging witty
mo.

END OF HANDOUT

For you,

I hope may natutunan ka. Sana hindi mo tig-taken for granted ang basic accounting. Mahirap ituro ang
accounting sa online pero as much as possible ginawan at gagawan ko ng paraan para matuto ang lahat.
Sana na-appreciate ninyo ang basic accounting. Kahit na crash course ito dahil kailangan ninyo ng pundasyon.
Malayo sana ang marating ninyo sa kursong ito at nawa’y makaimbento na ng vaccine para naman magkaroon
na ng face to face at ma meet kopa kayo sa mga future accounting subjects ninyo. Ingat kayo at God bless
always 

-Sir X

XEREZAGURASINGSON,CPA Iamchavit@gmail.com 09508092173

ADVANCED FUNDAMENTALS OF ACCOUNTING MON-SAT 1:00-5:30PM
SUMMER CLASS 2020

END OF BASIC ACCOUNTING

XEREZAGURASINGSON,CPA Iamchavit@gmail.com 09508092173