What are the four closing journal entries? Why are they necessary?© BrainMass Inc. brainmass.com October 25, 2018, 6:37 am ad1c9bdddf
Detailed answer to your question is provided in the attached word document with the example of closing entries.
After transactions are identified, recorded, and summarized, and Trial balance prepared, the following four financial statements are prepared.
1 INCOME STATEMENT
2 STATEMENT OF OWNER'S EQUITY
3 BALANCE SHEET
4 CASH FLOW STATEMENT
It is more convenient to prepare Income statement and balance sheet with the help of a 10 column work sheet. All income accounts like sales revenue, service revenue etc., having credit balance as such entered in credit column of income statement of work sheet.
Expenses accounts are debit balances which are entered in debit column of income statement part of work sheet.
Adjusting entries are made to adjust the accounts at the end of the period. The adjusting entries are incorporated in the work sheet by adding the expenses payable or incomes accrued in the related ...
The four closing journal entries are determined. Why it is necessary is given.
Prepare the necessary closing entries based on the following selected accounts:
Accumulated Depreciation $10,000
Depreciation Expense 7,000
Owner's Capital 20,000
Owner's Drawings 12,000
Salaries and Wages Expense 18,000
Service Revenue 31,000