war22ech04acct cycle
Adeng Pustikaningsih, M.Si.
Dosen Jurusan Pendidikan Akuntansi
Fakultas Ekonomi
Universitas Negeri Yogyakarta
CP: 08 222 180 1695
Email : adengpustikaningsih@uny.ac.id
1
After studying this chapter, you should be
able to:
1. Describe the flow of accounting
information from the unadjusted trial
balance into the adjusted trial balance and
financial statements.
2. Prepare financial statements from
adjusted account balances.
3. Prepare closing entries.
2
After studying this chapter, you should be
able to:
4. Describe the accounting cycle.
5. Illustrate the accounting cycle for one
period.
6. Explain what is meant by the fiscal
year and the natural business year.
33
4-1
Objective 1
Describe the flow of accounting
information from the
unadjusted trial balance into the
adjusted trial balance and
financial statements.
4
4-1
A
B
Account Tittle
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Account Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Misscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accumulated Depreciation
Net income
C
D
E
F
G
H
I
J
K
SolusiNet
End-of-Period Spreadsheet (Worksheet)
For the Two Months Ended December 31, 2007
Undajusted Trial
Adjusted Trial
Balance
Adjustments
Balance
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
2,065
2,065
2,065
2,220
(d) 500
2,720
2,720
2,000
(a) 1,240
760
760
2,400
(b) 200
2,200
2,200
20,000
20,000
20,000
1,800
1,800
1,800
900
900
900
360
(c) 120
240
240
25,000
25,000
25,000
4,000
4,000
4,000
16,340
(d)500
16,840
16,840
4,275
(e) 250
4,525
4,525
1,600
1,600
1,600
985
985
985
800
(a) 1,240
2,040
2,040
455
455
455
42,600
42,600
(b) 200
200
200
(c)120
120
120
(e) 250
250
250
(f) 50
50
50
(f) 50
50
50
2,360
2,360
43,400
43,400
9,855
16,960
33,545
26,440
7,105
7,105
16,960
16,960
33,545
33,545
5
4-1
Spreadsheet (Work Sheet)
Trial Balance
Accounts
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Accounts are listed in the Trial Balance column
using the ending balance found in the general
ledger.
Cr
66
4-1
Spreadsheet (Work Sheet)
Trial Balance
Accounts
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Cr
Adjustments are entered here. Two possibilities:
1. Deferrals – Existing balances are changed.
2. Accruals – New information is entered.
77
4-1
Spreadsheet (Work Sheet)
Trial Balance
Accounts
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Cr
Adjustments are combined with
the trial balance. Account
balances are now adjusted.
88
4-1
Spreadsheet (Work Sheet)
Adjusted TB
Accounts
Dr
Cr
Income State.
Dr
Cr
Balance Sheet
Dr
Cr
Revenue and expense balances in the
Adjusted Trial Balance column are extended
to the Income Statement column.
99
4-1
Spreadsheet (Work Sheet)
Adjusted TB
Accounts
Dr
Cr
Income State.
Dr
Cr
Balance Sheet
Dr
Cr
Asset, liability, owner’s equity, and
drawing balances in the Adjusted
Trial Balance column are extended
10
10
to the Balance Sheet column.
4-1
Example Exercise 4-1
The balances for the accounts listed below appear in the
Adjusted Trial Balance columns of the end-of-period
spreadsheet (work sheet). Indicate whether each balance
should be extended to (a) an Income Statement column or
(b) a Balance Sheet column.
1. Ambar Dewi, Drawing
2. Utilities Expense
3. Accumulated
Depreciation—Equipment
4. Unearned Rent
5.
6.
7.
8.
Fees Earned
Accounts Payable
Rent Revenue
Supplies
11
4-1
Follow My Example 4-1
1.
2.
3.
4.
5.
6.
7.
8.
Balance Sheet column
Income Statement column
Balance Sheet column
Balance Sheet column
Income Statement column
Balance Sheet column
Income Statement column
Balance Sheet column
For Practice: PE 4-1A, PE 4-1B
12
4-2
Objective 2
Prepare financial
statements from adjusted
account balances.
13
4-2
SolusiNet
Income Statement
For the Two Months Ended December 31, 2007
Fees earned
Rent revenue
Total revenues
Expenses:
Wages expense
Suppliea expense
Rent expense
Utilities expense
Insurance expense
Depreciation expense
Misscellaneous expense
Total expenses
Net income
Rp16 840 000
120 000
Rp16 960 000
Rp4 525 000
2 040 000
1 600 000
985 000
200 000
50 000
455 000
9 855 000
Rp7 105 000
SolusiNet
Statement of Owner's Equity
For the Two Months Ended December 31, 2007
Cinta Cita, capital, November 1, 2007
Investments on November 1, 2007
Net Income for November and December
Less withdrawals
Increase in owner's equity
Cinta cita, capital, December 31, 2007
Rp
Rp25
7
RP32
4
000
105
105
000
000
000
000
000
28 105 000
Rp28 105 000
0
To balance
sheet
14
4-2
SolusiNet
Balance Sheet
December 31, 2007
Assets
Liabilities
Current assets;
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Total current assets
Property, Plant and equipment
Land
Office equipment
Less accum. depr.
Total property, plant
and equipment
Total assets
Current Liabilities
Accounts payable
Wages payable
Unearned rent
Total liabilities
Rp2 065 000
2 720 000
760 000
2 200 000
Rp 900 000
250 000
240 000
Rp1 390 000
Rp7 745 000
Rp20 000 000
Rp1,800,000
50,000
owner's equity
1 750 000
21 750 000
Rp29 495 000
Cinta Cita, capital
Total liabilities and
owner's equity
Rp28 105 000
Rp29 495 000
From statement of owner’
equity
15
4-2
Example Exercise 4-2
In the Balance Sheet columns of the end-of-period
spreadsheet (work sheet) for Dahsyat Consulting Co. for the
current year, the Debit column total is Rp678,450,000 and
the Credit column total is Rp599,750,000 before the amount
of net income or net loss has been included. In preparing
the income statement from the end-of-period spreadsheet
(work sheet), what is the amount of net income or net loss?
16
4-2
Follow My Example 4-2
A net income of Rp78,700,000 (Rp678,450,000 –
Rp599,750,000) would be reported. When the Debit
column of the Balance Sheet columns is more than the
Credit column, net income is reported. If the Credit
column exceeds the Debit column, a net loss is reported.
For Practice: PE 4-2A, PE 4-2B
17
4-2
Example Exercise 4-3
Zaka Gading owns and operates Gading Employment
Services. On January 1, 2007, Zaka Gading, Capital had a
balance of Rp186,000,000. During the year, Zaka invested
an additional Rp40,000,000 and withdrew Rp25,000,000.
For the year ended December 31, 2007, Gading
Employment Services reported a net income of
Rp18,750,000. Prepare a statement of owner’s equity for
the year ended December 31, 2007.
18
4-2
Follow My Example 4-3
GADING EMPLOYMENT SERVICES
STATEMENT OF OWNER’S EQUITY
For the Year Ended December 31, 2007
Zaka Gading, capital, January 1, 2007 Rp186,000,000
40,000,000
Additional investment during 2007
Total
Rp226,000,000
Withdrawals
Rp 25,000,000
Less net income
18,750,000
Decrease in owner’s equity
6,250,000
Zaka Gading, capital, December 31, 2007
Rp219,750,000
For Practice: PE 4-3A, PE 4-3B
19
4-2
A classified balance sheet is a
balance sheet that was expanded by
adding subsections for current
assets; property, plant, and
equipment; and current liabilities.
20
4-2
Cash and other assets that are expected
to be converted into cash, sold or used
up usually within a year or less,
through the normal operations of the
business are called current assets.
Cash
Accounts Receivable
Supplies
21
4-2
Notes receivable are written
promises by the customer to
pay the amount of the note
and possibly interest at an
agreed rate.
22
4-2
Property, plant, and equipment (also called
fixed assets) include assets that depreciate
over a period of time. Land is an exception
as it is not subject to depreciation.
Equipment
Machinery
Buildings
Land
23
4-2
Liabilities that will be due within a
short time (usually one year or less)
and that are to be paid out of current
assets are called current liabilities.
Accounts payable
Wages payable
Interest payable
Unearned fees
24
4-2
Liabilities not due for a long
time (usually more than one
year) are long-term liabilities.
Notes payable
Mortgage payable
Bond payable
25
4-2
Owner’s equity is the owner’s
right to the assets of the business.
Owner’s equity is added to the
total liabilities, and the total must
be equal to the total assets.
26
4-2
Example Exercise 4-4
The following accounts appear in the adjusted trial balance of
Mata Hati Consulting. Indicate whether each account would be
reported in the (a) current asset; (b) property, plant, and
equipment; (c) current liability, (d) long-term liability; or (e)
owner’s equity section of the December 31, 2007 balance sheet
of Hindsight Consulting.
1. Jaka Cahyadi, Capital
2. Notes Receivable (due
in 6 months)
3. Notes Payable (due in
2009)
4. Land
5. Cash
6. Unearned Rent
months)
7. Accumulated Depr.—
Equipment
8. Accounts Payable
27
27
4-2
Follow My Example 4-4
1.
2.
3.
4.
Owner’s equity
Current asset
Long-term liability
Property, plant, and equip.
5.
6.
7.
8.
Current asset
Current liability
Property, plant, and equipment
Current liability
For Practice: PE 4-4A, PE 4-4B
28
4-3
Objective 3
Prepare closing
entries.
29
4-3
Accounts that are relatively
permanent from year to year are
called real accounts. Accounts
that report amounts for only one
period are called temporary
accounts or nominal accounts.
30
4-3
To report amounts for only one period,
temporary accounts should have zero
balances at the beginning of the
period. At the end of the period the
revenue and expense account balances
are transferred to Income Summary.
31
4-3
The balance of Income Summary is
then transferred to the owner’s capital
account. The balance of the owner’s
drawing account is also transferred to
the owner’s capital account. The
entries that transfer these balances are
called closing entries.
32
4-3
33
33
4-3
Debit each revenue account
for the amount of its balance,
and credit Income Summary
for the total revenue.
Fees Earned
Income Summary
16,960
16,840 Bal. 16,840
Rent Revenue
120 Bal.
(In Rp000)
120
34
34
4-3
Wages Expense
Bal.
4,525
4,525
9,855
Rent Expense
Bal.
1,600
Income Summary
16,960
1,600
Depreciation Expense
Bal.
50
50
Utilities Expense
Bal.
985
985
Supplies Expense
Bal.
2,040
2,040
Insurance Expense
Bal.
200
Bal.
455
200
Miscellaneous Expense
455
Debit Income Summary
for the total expenses
and credit each expense
account for its balance.
(In Rp000)
35
35
4-3
Income Summary
9,855
7,105
16,960
Cinta Cita, Capital
Bal. 25,000
7,105
Cinta Cita, Drawing
Bal.
Debit Income
Summary for the
amount of its balance
(in this case, the net
income) and credit the
capital account.
4,000
(In Rp000)
36
36
4-3
CintaCita, Capital
4,000
Bal. 25,000
7,105
Cinta Cita, Drawing
Bal.
4,000
4,000
Debit the capital
account for the
balance of the
drawing account,
and credit drawing
for the same
amount.
37
37
Closing Entries for SolusiNet
JOURNAL
Date
Step 1
Dec.2007
Description
31
Step 2
31
Step 3
31
Step 4
31
Post.
Ref.
4-3
Page 6
Debit
Closing Entries
Fees Earned
Rent Revenue
Income Summary
41
42
33
16 840 000
120 000
Income Summary
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Expense
33
51
52
53
54
55
56
59
9 855 000
Income Summary
Cinta Cita, Capital
33
31
7 105 000
Cinta Cita, Capital
Cinta Cita, Drawing
31
32
4 000 000
Credit
16 960 000
4 525 000
1 600 000
50 000
985 000
2 040 000
200 000
455 000
7 105 000
4 000 000
38
4-3
After the closing entries
are posted, all of the
temporary accounts have
zero balances.
39
4-3
4-4
Example Exercise 4-5
The
accounts
in the adjusted
trialthebalance
Afterfollowing
the accounts
have appear
been adjusted
at July 31,
end of of
the
Hindsight
Indicate
whether
eachfrom
account
wouldof
be
fiscal
year,Consulting.
the following
balances
are taken
the ledger
reported
in the
(a) current asset; (b) property, plant, and
Ungu
Violet
Services
equipment;
current
liability, (d) long-term
liability; or (e)
Anisa (c)
Putri,
Capital
Rp615,850,000
owner’s
equity
section
of the December 31, 2007,
balance sheet
Anisa
Putri,
Drawing
25,000,000
of Hindsight
Consulting.
Fees Earned
380,450,000
Wages Expense
250,000,000
Rent Expense
65,000,000
Supplies Expense
18,250,000
Miscellaneous Expense
6,200,000
Journalize the four entries required to close the accounts.
40
4-3
Follow My Example 4-5
July 31
Fees Earned
Income Summary
380,450,000
380,450,000
31 Income Summary
Wages Expense
Rent Expense
Supplies Expense
Miscellaneous Expense
339,450,000
250,000,000
65,000,000
18,250,000
6,200,000
31 Income Summary
Anisa Putri, Capital
41,000,000
31 Terry Lambert, Capital
Anisa Putri, Drawing
25,000,000
41,000,000
25,000,000
41
For Practice: PE 4-5A, PE 4-5B
4-3
Exhibit 7 Post-Closing Trial Balance
SolusiNet
Post-Closing Trial Balance
December 31, 2007
Cash
2 065 000
Accounts Receivable
2 720 000
Supplies
760 000
Prepaid Insurance
2 200 000
Land
20 000 000
Office Equipment
1 800 000
Accumulated Depreciation
50
Accounts Payable
900
Wages Payable
250
Unearned Rent
240
Cinta Cita, Capital
28 105
29 545 000 29 545
000
000
000
000
000
000
42
42
4-4
Objective 4
Describe the
accounting cycle.
43
4-4
The accounting process that begins
with analyzing and journalizing
transactions and ends with preparing
the accounting records for the next
period’s transactions is called the
accounting cycle. There are ten steps
in the accounting cycle.
44
The Accounting Cycle
4-4
1. Transactions are analyzed and recorded
in the journal.
2. Transactions are posted to the ledger.
3. An unadjusted trial balance is prepared.
4. Adjustment data are assembled and
analyzed.
5. An optional end-of-period spreadsheet
(work sheet) is prepared.
Continued
45
4-4
6. Adjusting entries are journalized and
posted to the ledger.
7. An adjusted trial balance is prepared.
8. Financial statements are prepared.
9. Closing entries are journalized and
posted to the ledger.
10. A post-closing trial balance is prepared.
46
4-4
4-4
Example Exercise 4-6
The following
accounts
appear
trialcycle,
balance
of
From
the following
list of
stepsin
inthe
theadjusted
accounting
identify
Hindsight
Consulting.
Indicate whether each account would be
what
two steps
are missing.
reported
in the (a) are
current
asset; (b)
plant,
andjournal.
a. Transactions
analyzed
andproperty,
recorded
in the
equipment;
(c) current
liability,to(d)
b. Transactions
are posted
thelong-term
ledger. liability; or (e)
owner’s
equity section
of the
Decemberand
31,analyzed.
2007, balance sheet
c. Adjustment
data are
assembled
of
Consulting.
d. Hindsight
An optional
end-of-period spreadsheet (work sheet) is
e.
f.
g.
h.
prepared.
Adjusting entries are journalized and posted to the
ledger.
Financial statements are prepared.
Closing entries are journalized and posted to the
ledger.
A post-closing trial balance is prepared.
47
21
4-4
Follow My Example 4-6
The following two steps are missing: (1) the
preparation of an unadjusted trial balance and (2)
the preparation of the adjusted trial balance. The
unadjusted trial balance should be prepared after
step (b). The adjusted trial balance should be
prepared after step (e).
48
For Practice: PE 4-6A, PE 4-6B
4-5
Objective 5
Illustrate the accounting
cycle for one period.
Refer to the textbook for
this extended illustration.
49
4-6
Objective 6
Explain what is meant by
the fiscal year and the
natural business year.
50
4-6
The annual accounting period adopted
by a business is known as its fiscal
year. When a business adopts a fiscal
year that ends when business activities
have reached the lowest point in its
annual operation, such a fiscal year is
also called the natural year.
51
Financial History of a Business
4-6
The financial history of a business may be
shown by a series of balance sheets and
income statements, as displayed below.
52
52
Appendix
End-of-Period
Spreadsheet (Work Sheet)
53
The end-of-period spreadsheet (work
sheet) shown in the following slides
does not have the usual spreadsheet
headings due to space constraints.
54
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Unadjusted
Trial Balance
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
900
360
25,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjustments
Debit
Credit
Adjusted
Trial Balance
Debit
Credit
The
unadjusted
trial balance
is checked
for equality.
42,600
55
55
(In Rp000)
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Debit
Credit
Adjustments
Debit
2,065
2,220
2,000
2,400
20,000
1,800
Credit
Debit
Credit
(a) 1,240
Cost of
supplies on
hand at end
of period is
Rp760,000.
900
360
25,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
(a) 1,240
42,600
56
56
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Unadjusted
Trial Balance
Debit
Credit
Adjustments
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
(a) 1,240
(b) 200
900
360
25,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(a) 1,240
42,600
(b) 200
Accounts are added as needed.
The
insurance
expense for
December is
Rp200,000
(Rp2,400,00
0/12)
57
57
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Unadjusted
Trial Balance
Debit
Credit
Adjustments
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(a) 1,240
Rent revenue
earned
during
December
was
Rp120,000.
42,600
(b) 200
(c) 120
58
58
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Unadjusted
Trial Balance
Debit
Credit
Adjustments
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
(a) 1,240
(b) 200
900
360
25,000
Wages
accrued but
not paid at
the end of
December
totaled
Rp250,000.
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(d)
250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
59
59
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Unadjusted
Trial Balance
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
(e)
500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(e)
500
(d) 250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
Fees accrued
at the end of
December
but not
recorded
total
Rp500,000.
60
60
(In Rp000)
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjusted
Trial Balance
Adjustments
Debit
Credit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Debit
(e) 500
(d) 250
Depreciation
of office
equipment is
Rp50,000 for
December.
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
(f)
50
(f)
50
61
61
(In Rp000)
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjusted
Trial Balance
Adjustments
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
(e) 500
(d) 250
(a) 1,240
Debit
Credit
To make
more
space,
let’s
remove
the
heading.
42,600
(b) 200
(c) 120
(d) 250
(f)
50
(f)
50
62
62
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
Adjusted
Trial Balance
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
(In Rp000)
4,000
16,340
4,275
1,600
985
800
455
42,600
(e) 500
(d) 250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
Summed
and
ruled
(f)
50
(f)
2,360
50
2,360
63
63
The next step is to add or subtract
the adjustments from (to) the
amounts found in the Unadjusted
Trial Balance columns and enter
the results in the Adjusted Trial
Balance columns.
64
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
(e) 500
(In Rp000)
(d) 250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
(f)
50
(f)
2,360
65
50
2,360
65
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
(c) 120
4,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
(e) 500
(d) 250
16,840
4,525
1,600
985
2,040
455
(a) 1,240
42,600
200
(b) 200
(c) 120
(d) 250
(In Rp000)
(f)
50
50
(f)
2,360
120
250
50
2,360
66 50
43,400
43,400
66
Because of space
constraints, the Unadjusted
Trial Balance and the
Adjustments columns will
not be shown in the
following slides.
67
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
(In Rp000)
4,000
16,840
4,525
1,600
985
2,040
455
200
120
250
50
43,400
50
43,400
68
68
The next step is to
extend amounts in the
Adjusted Trial Balance
columns to the Income
Statement and Balance
Sheet columns.
69
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
4,000
16,840
(In Rp000)
4,525
1,600
985
2,040
455
200
120
250
50
43,400
50
43,400
70
70
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
71 50
50
43,400
71
The Income
Statement and
Balance Sheet
columns are totaled.
72
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
73 50
50
43,400
73
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
50
43,400
74 50
9,855
16,960
33,545
74
26,440
The net income or net
loss is determined. Then
the Income Statement
and Balance Sheet
columns are totaled and
double-ruled.
75
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
50
43,400
76 50
9,855
16,960
33,545
76
26,440
77
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Adjusted
Trial Balance
Debit
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
Net income
Income Statement
(In Rp000)
120
250
50
50
43,400
77 50
9,855
7,105
16,960
16,960
33,545
16,960
33,545
26,440
7,105
33,545
(In Rp000)
Income Statement
Balance Sheet
9,855 16,960 33,545
7,105
16,960 16,960 33,545
Net Income
26,440
7,105
33,545
Net
Income
The difference between the Income Statement column
totals is the net income (or net loss) for the period.
78
78
Dosen Jurusan Pendidikan Akuntansi
Fakultas Ekonomi
Universitas Negeri Yogyakarta
CP: 08 222 180 1695
Email : adengpustikaningsih@uny.ac.id
1
After studying this chapter, you should be
able to:
1. Describe the flow of accounting
information from the unadjusted trial
balance into the adjusted trial balance and
financial statements.
2. Prepare financial statements from
adjusted account balances.
3. Prepare closing entries.
2
After studying this chapter, you should be
able to:
4. Describe the accounting cycle.
5. Illustrate the accounting cycle for one
period.
6. Explain what is meant by the fiscal
year and the natural business year.
33
4-1
Objective 1
Describe the flow of accounting
information from the
unadjusted trial balance into the
adjusted trial balance and
financial statements.
4
4-1
A
B
Account Tittle
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Account Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Misscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accumulated Depreciation
Net income
C
D
E
F
G
H
I
J
K
SolusiNet
End-of-Period Spreadsheet (Worksheet)
For the Two Months Ended December 31, 2007
Undajusted Trial
Adjusted Trial
Balance
Adjustments
Balance
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
2,065
2,065
2,065
2,220
(d) 500
2,720
2,720
2,000
(a) 1,240
760
760
2,400
(b) 200
2,200
2,200
20,000
20,000
20,000
1,800
1,800
1,800
900
900
900
360
(c) 120
240
240
25,000
25,000
25,000
4,000
4,000
4,000
16,340
(d)500
16,840
16,840
4,275
(e) 250
4,525
4,525
1,600
1,600
1,600
985
985
985
800
(a) 1,240
2,040
2,040
455
455
455
42,600
42,600
(b) 200
200
200
(c)120
120
120
(e) 250
250
250
(f) 50
50
50
(f) 50
50
50
2,360
2,360
43,400
43,400
9,855
16,960
33,545
26,440
7,105
7,105
16,960
16,960
33,545
33,545
5
4-1
Spreadsheet (Work Sheet)
Trial Balance
Accounts
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Accounts are listed in the Trial Balance column
using the ending balance found in the general
ledger.
Cr
66
4-1
Spreadsheet (Work Sheet)
Trial Balance
Accounts
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Cr
Adjustments are entered here. Two possibilities:
1. Deferrals – Existing balances are changed.
2. Accruals – New information is entered.
77
4-1
Spreadsheet (Work Sheet)
Trial Balance
Accounts
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Cr
Adjustments are combined with
the trial balance. Account
balances are now adjusted.
88
4-1
Spreadsheet (Work Sheet)
Adjusted TB
Accounts
Dr
Cr
Income State.
Dr
Cr
Balance Sheet
Dr
Cr
Revenue and expense balances in the
Adjusted Trial Balance column are extended
to the Income Statement column.
99
4-1
Spreadsheet (Work Sheet)
Adjusted TB
Accounts
Dr
Cr
Income State.
Dr
Cr
Balance Sheet
Dr
Cr
Asset, liability, owner’s equity, and
drawing balances in the Adjusted
Trial Balance column are extended
10
10
to the Balance Sheet column.
4-1
Example Exercise 4-1
The balances for the accounts listed below appear in the
Adjusted Trial Balance columns of the end-of-period
spreadsheet (work sheet). Indicate whether each balance
should be extended to (a) an Income Statement column or
(b) a Balance Sheet column.
1. Ambar Dewi, Drawing
2. Utilities Expense
3. Accumulated
Depreciation—Equipment
4. Unearned Rent
5.
6.
7.
8.
Fees Earned
Accounts Payable
Rent Revenue
Supplies
11
4-1
Follow My Example 4-1
1.
2.
3.
4.
5.
6.
7.
8.
Balance Sheet column
Income Statement column
Balance Sheet column
Balance Sheet column
Income Statement column
Balance Sheet column
Income Statement column
Balance Sheet column
For Practice: PE 4-1A, PE 4-1B
12
4-2
Objective 2
Prepare financial
statements from adjusted
account balances.
13
4-2
SolusiNet
Income Statement
For the Two Months Ended December 31, 2007
Fees earned
Rent revenue
Total revenues
Expenses:
Wages expense
Suppliea expense
Rent expense
Utilities expense
Insurance expense
Depreciation expense
Misscellaneous expense
Total expenses
Net income
Rp16 840 000
120 000
Rp16 960 000
Rp4 525 000
2 040 000
1 600 000
985 000
200 000
50 000
455 000
9 855 000
Rp7 105 000
SolusiNet
Statement of Owner's Equity
For the Two Months Ended December 31, 2007
Cinta Cita, capital, November 1, 2007
Investments on November 1, 2007
Net Income for November and December
Less withdrawals
Increase in owner's equity
Cinta cita, capital, December 31, 2007
Rp
Rp25
7
RP32
4
000
105
105
000
000
000
000
000
28 105 000
Rp28 105 000
0
To balance
sheet
14
4-2
SolusiNet
Balance Sheet
December 31, 2007
Assets
Liabilities
Current assets;
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Total current assets
Property, Plant and equipment
Land
Office equipment
Less accum. depr.
Total property, plant
and equipment
Total assets
Current Liabilities
Accounts payable
Wages payable
Unearned rent
Total liabilities
Rp2 065 000
2 720 000
760 000
2 200 000
Rp 900 000
250 000
240 000
Rp1 390 000
Rp7 745 000
Rp20 000 000
Rp1,800,000
50,000
owner's equity
1 750 000
21 750 000
Rp29 495 000
Cinta Cita, capital
Total liabilities and
owner's equity
Rp28 105 000
Rp29 495 000
From statement of owner’
equity
15
4-2
Example Exercise 4-2
In the Balance Sheet columns of the end-of-period
spreadsheet (work sheet) for Dahsyat Consulting Co. for the
current year, the Debit column total is Rp678,450,000 and
the Credit column total is Rp599,750,000 before the amount
of net income or net loss has been included. In preparing
the income statement from the end-of-period spreadsheet
(work sheet), what is the amount of net income or net loss?
16
4-2
Follow My Example 4-2
A net income of Rp78,700,000 (Rp678,450,000 –
Rp599,750,000) would be reported. When the Debit
column of the Balance Sheet columns is more than the
Credit column, net income is reported. If the Credit
column exceeds the Debit column, a net loss is reported.
For Practice: PE 4-2A, PE 4-2B
17
4-2
Example Exercise 4-3
Zaka Gading owns and operates Gading Employment
Services. On January 1, 2007, Zaka Gading, Capital had a
balance of Rp186,000,000. During the year, Zaka invested
an additional Rp40,000,000 and withdrew Rp25,000,000.
For the year ended December 31, 2007, Gading
Employment Services reported a net income of
Rp18,750,000. Prepare a statement of owner’s equity for
the year ended December 31, 2007.
18
4-2
Follow My Example 4-3
GADING EMPLOYMENT SERVICES
STATEMENT OF OWNER’S EQUITY
For the Year Ended December 31, 2007
Zaka Gading, capital, January 1, 2007 Rp186,000,000
40,000,000
Additional investment during 2007
Total
Rp226,000,000
Withdrawals
Rp 25,000,000
Less net income
18,750,000
Decrease in owner’s equity
6,250,000
Zaka Gading, capital, December 31, 2007
Rp219,750,000
For Practice: PE 4-3A, PE 4-3B
19
4-2
A classified balance sheet is a
balance sheet that was expanded by
adding subsections for current
assets; property, plant, and
equipment; and current liabilities.
20
4-2
Cash and other assets that are expected
to be converted into cash, sold or used
up usually within a year or less,
through the normal operations of the
business are called current assets.
Cash
Accounts Receivable
Supplies
21
4-2
Notes receivable are written
promises by the customer to
pay the amount of the note
and possibly interest at an
agreed rate.
22
4-2
Property, plant, and equipment (also called
fixed assets) include assets that depreciate
over a period of time. Land is an exception
as it is not subject to depreciation.
Equipment
Machinery
Buildings
Land
23
4-2
Liabilities that will be due within a
short time (usually one year or less)
and that are to be paid out of current
assets are called current liabilities.
Accounts payable
Wages payable
Interest payable
Unearned fees
24
4-2
Liabilities not due for a long
time (usually more than one
year) are long-term liabilities.
Notes payable
Mortgage payable
Bond payable
25
4-2
Owner’s equity is the owner’s
right to the assets of the business.
Owner’s equity is added to the
total liabilities, and the total must
be equal to the total assets.
26
4-2
Example Exercise 4-4
The following accounts appear in the adjusted trial balance of
Mata Hati Consulting. Indicate whether each account would be
reported in the (a) current asset; (b) property, plant, and
equipment; (c) current liability, (d) long-term liability; or (e)
owner’s equity section of the December 31, 2007 balance sheet
of Hindsight Consulting.
1. Jaka Cahyadi, Capital
2. Notes Receivable (due
in 6 months)
3. Notes Payable (due in
2009)
4. Land
5. Cash
6. Unearned Rent
months)
7. Accumulated Depr.—
Equipment
8. Accounts Payable
27
27
4-2
Follow My Example 4-4
1.
2.
3.
4.
Owner’s equity
Current asset
Long-term liability
Property, plant, and equip.
5.
6.
7.
8.
Current asset
Current liability
Property, plant, and equipment
Current liability
For Practice: PE 4-4A, PE 4-4B
28
4-3
Objective 3
Prepare closing
entries.
29
4-3
Accounts that are relatively
permanent from year to year are
called real accounts. Accounts
that report amounts for only one
period are called temporary
accounts or nominal accounts.
30
4-3
To report amounts for only one period,
temporary accounts should have zero
balances at the beginning of the
period. At the end of the period the
revenue and expense account balances
are transferred to Income Summary.
31
4-3
The balance of Income Summary is
then transferred to the owner’s capital
account. The balance of the owner’s
drawing account is also transferred to
the owner’s capital account. The
entries that transfer these balances are
called closing entries.
32
4-3
33
33
4-3
Debit each revenue account
for the amount of its balance,
and credit Income Summary
for the total revenue.
Fees Earned
Income Summary
16,960
16,840 Bal. 16,840
Rent Revenue
120 Bal.
(In Rp000)
120
34
34
4-3
Wages Expense
Bal.
4,525
4,525
9,855
Rent Expense
Bal.
1,600
Income Summary
16,960
1,600
Depreciation Expense
Bal.
50
50
Utilities Expense
Bal.
985
985
Supplies Expense
Bal.
2,040
2,040
Insurance Expense
Bal.
200
Bal.
455
200
Miscellaneous Expense
455
Debit Income Summary
for the total expenses
and credit each expense
account for its balance.
(In Rp000)
35
35
4-3
Income Summary
9,855
7,105
16,960
Cinta Cita, Capital
Bal. 25,000
7,105
Cinta Cita, Drawing
Bal.
Debit Income
Summary for the
amount of its balance
(in this case, the net
income) and credit the
capital account.
4,000
(In Rp000)
36
36
4-3
CintaCita, Capital
4,000
Bal. 25,000
7,105
Cinta Cita, Drawing
Bal.
4,000
4,000
Debit the capital
account for the
balance of the
drawing account,
and credit drawing
for the same
amount.
37
37
Closing Entries for SolusiNet
JOURNAL
Date
Step 1
Dec.2007
Description
31
Step 2
31
Step 3
31
Step 4
31
Post.
Ref.
4-3
Page 6
Debit
Closing Entries
Fees Earned
Rent Revenue
Income Summary
41
42
33
16 840 000
120 000
Income Summary
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Expense
33
51
52
53
54
55
56
59
9 855 000
Income Summary
Cinta Cita, Capital
33
31
7 105 000
Cinta Cita, Capital
Cinta Cita, Drawing
31
32
4 000 000
Credit
16 960 000
4 525 000
1 600 000
50 000
985 000
2 040 000
200 000
455 000
7 105 000
4 000 000
38
4-3
After the closing entries
are posted, all of the
temporary accounts have
zero balances.
39
4-3
4-4
Example Exercise 4-5
The
accounts
in the adjusted
trialthebalance
Afterfollowing
the accounts
have appear
been adjusted
at July 31,
end of of
the
Hindsight
Indicate
whether
eachfrom
account
wouldof
be
fiscal
year,Consulting.
the following
balances
are taken
the ledger
reported
in the
(a) current asset; (b) property, plant, and
Ungu
Violet
Services
equipment;
current
liability, (d) long-term
liability; or (e)
Anisa (c)
Putri,
Capital
Rp615,850,000
owner’s
equity
section
of the December 31, 2007,
balance sheet
Anisa
Putri,
Drawing
25,000,000
of Hindsight
Consulting.
Fees Earned
380,450,000
Wages Expense
250,000,000
Rent Expense
65,000,000
Supplies Expense
18,250,000
Miscellaneous Expense
6,200,000
Journalize the four entries required to close the accounts.
40
4-3
Follow My Example 4-5
July 31
Fees Earned
Income Summary
380,450,000
380,450,000
31 Income Summary
Wages Expense
Rent Expense
Supplies Expense
Miscellaneous Expense
339,450,000
250,000,000
65,000,000
18,250,000
6,200,000
31 Income Summary
Anisa Putri, Capital
41,000,000
31 Terry Lambert, Capital
Anisa Putri, Drawing
25,000,000
41,000,000
25,000,000
41
For Practice: PE 4-5A, PE 4-5B
4-3
Exhibit 7 Post-Closing Trial Balance
SolusiNet
Post-Closing Trial Balance
December 31, 2007
Cash
2 065 000
Accounts Receivable
2 720 000
Supplies
760 000
Prepaid Insurance
2 200 000
Land
20 000 000
Office Equipment
1 800 000
Accumulated Depreciation
50
Accounts Payable
900
Wages Payable
250
Unearned Rent
240
Cinta Cita, Capital
28 105
29 545 000 29 545
000
000
000
000
000
000
42
42
4-4
Objective 4
Describe the
accounting cycle.
43
4-4
The accounting process that begins
with analyzing and journalizing
transactions and ends with preparing
the accounting records for the next
period’s transactions is called the
accounting cycle. There are ten steps
in the accounting cycle.
44
The Accounting Cycle
4-4
1. Transactions are analyzed and recorded
in the journal.
2. Transactions are posted to the ledger.
3. An unadjusted trial balance is prepared.
4. Adjustment data are assembled and
analyzed.
5. An optional end-of-period spreadsheet
(work sheet) is prepared.
Continued
45
4-4
6. Adjusting entries are journalized and
posted to the ledger.
7. An adjusted trial balance is prepared.
8. Financial statements are prepared.
9. Closing entries are journalized and
posted to the ledger.
10. A post-closing trial balance is prepared.
46
4-4
4-4
Example Exercise 4-6
The following
accounts
appear
trialcycle,
balance
of
From
the following
list of
stepsin
inthe
theadjusted
accounting
identify
Hindsight
Consulting.
Indicate whether each account would be
what
two steps
are missing.
reported
in the (a) are
current
asset; (b)
plant,
andjournal.
a. Transactions
analyzed
andproperty,
recorded
in the
equipment;
(c) current
liability,to(d)
b. Transactions
are posted
thelong-term
ledger. liability; or (e)
owner’s
equity section
of the
Decemberand
31,analyzed.
2007, balance sheet
c. Adjustment
data are
assembled
of
Consulting.
d. Hindsight
An optional
end-of-period spreadsheet (work sheet) is
e.
f.
g.
h.
prepared.
Adjusting entries are journalized and posted to the
ledger.
Financial statements are prepared.
Closing entries are journalized and posted to the
ledger.
A post-closing trial balance is prepared.
47
21
4-4
Follow My Example 4-6
The following two steps are missing: (1) the
preparation of an unadjusted trial balance and (2)
the preparation of the adjusted trial balance. The
unadjusted trial balance should be prepared after
step (b). The adjusted trial balance should be
prepared after step (e).
48
For Practice: PE 4-6A, PE 4-6B
4-5
Objective 5
Illustrate the accounting
cycle for one period.
Refer to the textbook for
this extended illustration.
49
4-6
Objective 6
Explain what is meant by
the fiscal year and the
natural business year.
50
4-6
The annual accounting period adopted
by a business is known as its fiscal
year. When a business adopts a fiscal
year that ends when business activities
have reached the lowest point in its
annual operation, such a fiscal year is
also called the natural year.
51
Financial History of a Business
4-6
The financial history of a business may be
shown by a series of balance sheets and
income statements, as displayed below.
52
52
Appendix
End-of-Period
Spreadsheet (Work Sheet)
53
The end-of-period spreadsheet (work
sheet) shown in the following slides
does not have the usual spreadsheet
headings due to space constraints.
54
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Unadjusted
Trial Balance
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
900
360
25,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjustments
Debit
Credit
Adjusted
Trial Balance
Debit
Credit
The
unadjusted
trial balance
is checked
for equality.
42,600
55
55
(In Rp000)
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Debit
Credit
Adjustments
Debit
2,065
2,220
2,000
2,400
20,000
1,800
Credit
Debit
Credit
(a) 1,240
Cost of
supplies on
hand at end
of period is
Rp760,000.
900
360
25,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
(a) 1,240
42,600
56
56
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Unadjusted
Trial Balance
Debit
Credit
Adjustments
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
(a) 1,240
(b) 200
900
360
25,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(a) 1,240
42,600
(b) 200
Accounts are added as needed.
The
insurance
expense for
December is
Rp200,000
(Rp2,400,00
0/12)
57
57
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Unadjusted
Trial Balance
Debit
Credit
Adjustments
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(a) 1,240
Rent revenue
earned
during
December
was
Rp120,000.
42,600
(b) 200
(c) 120
58
58
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Unadjusted
Trial Balance
Debit
Credit
Adjustments
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
(a) 1,240
(b) 200
900
360
25,000
Wages
accrued but
not paid at
the end of
December
totaled
Rp250,000.
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(d)
250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
59
59
(In Rp000)
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Unadjusted
Trial Balance
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
(e)
500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
Debit
Credit
(e)
500
(d) 250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
Fees accrued
at the end of
December
but not
recorded
total
Rp500,000.
60
60
(In Rp000)
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjusted
Trial Balance
Adjustments
Debit
Credit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Debit
(e) 500
(d) 250
Depreciation
of office
equipment is
Rp50,000 for
December.
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
(f)
50
(f)
50
61
61
(In Rp000)
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjusted
Trial Balance
Adjustments
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
(e) 500
(d) 250
(a) 1,240
Debit
Credit
To make
more
space,
let’s
remove
the
heading.
42,600
(b) 200
(c) 120
(d) 250
(f)
50
(f)
50
62
62
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
Adjusted
Trial Balance
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
(In Rp000)
4,000
16,340
4,275
1,600
985
800
455
42,600
(e) 500
(d) 250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
Summed
and
ruled
(f)
50
(f)
2,360
50
2,360
63
63
The next step is to add or subtract
the adjustments from (to) the
amounts found in the Unadjusted
Trial Balance columns and enter
the results in the Adjusted Trial
Balance columns.
64
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
(c) 120
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
(e) 500
(In Rp000)
(d) 250
(a) 1,240
42,600
(b) 200
(c) 120
(d) 250
(f)
50
(f)
2,360
65
50
2,360
65
Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
(e) 500
(a) 1,240
(b) 200
900
360
25,000
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
(c) 120
4,000
4,000
16,340
4,275
1,600
985
800
455
42,600
Adjusted
Trial Balance
(e) 500
(d) 250
16,840
4,525
1,600
985
2,040
455
(a) 1,240
42,600
200
(b) 200
(c) 120
(d) 250
(In Rp000)
(f)
50
50
(f)
2,360
120
250
50
2,360
66 50
43,400
43,400
66
Because of space
constraints, the Unadjusted
Trial Balance and the
Adjustments columns will
not be shown in the
following slides.
67
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
(In Rp000)
4,000
16,840
4,525
1,600
985
2,040
455
200
120
250
50
43,400
50
43,400
68
68
The next step is to
extend amounts in the
Adjusted Trial Balance
columns to the Income
Statement and Balance
Sheet columns.
69
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
4,000
16,840
(In Rp000)
4,525
1,600
985
2,040
455
200
120
250
50
43,400
50
43,400
70
70
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
71 50
50
43,400
71
The Income
Statement and
Balance Sheet
columns are totaled.
72
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
73 50
50
43,400
73
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
50
43,400
74 50
9,855
16,960
33,545
74
26,440
The net income or net
loss is determined. Then
the Income Statement
and Balance Sheet
columns are totaled and
double-ruled.
75
Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Debit
Income Statement
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
(In Rp000)
120
250
50
50
43,400
76 50
9,855
16,960
33,545
76
26,440
77
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accounts Payable
Unearned Rent
Cinta Cita, Capital
Cinta Cita, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Supplies Expense
Miscellaneous Expense
Insurance Expense
Rent Revenue
Wages Payable
Depreciation Expense
Accum. Depreciation
Adjusted
Trial Balance
Debit
Credit
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
Balance Sheet
Debit
Credit
2,065
2,720
760
2,200
20,000
1,800
900
240
25,000
900
240
25,000
4,000
4,000
16,840
16,840
4,525
1,600
985
2,040
455
4,525
1,600
985
2,040
455
200
200
120
250
50
43,400
Net income
Income Statement
(In Rp000)
120
250
50
50
43,400
77 50
9,855
7,105
16,960
16,960
33,545
16,960
33,545
26,440
7,105
33,545
(In Rp000)
Income Statement
Balance Sheet
9,855 16,960 33,545
7,105
16,960 16,960 33,545
Net Income
26,440
7,105
33,545
Net
Income
The difference between the Income Statement column
totals is the net income (or net loss) for the period.
78
78