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Do Now:

● Considering the closing entries made last class, what do you think we have to do now?● Think about the cycle we have gone through when

recording transactions thus far in this course● Hint: What two components of any spreadsheet

always need to balance and where have we done this before?

SLIDE 1

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Class Activity:

● Five cups labeled either Sales, Expenses, Income Summary, Drawing, and Capital● Pieces of paper have titles and amounts of Sales,

$12,000…Expenses, $9,800…Income Summary, blank…Drawing, $200…Capital, $2,390

● Transfer strips of paper to appropriate cup to exemplify four types of closing entries

● Others evaluate/assess decision by classmate

SLIDE 2

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Lesson 8-1 Audit Your Understanding

1. What do the ending balances of permanent accounts for one fiscal period represent at the beginning of the next fiscal period?

SLIDE 3

ANSWER

Beginning balances

Lesson 8-1

© 2014 Cengage Learning. All Rights Reserved.

Lesson 8-1 Audit Your Understanding

2. What do the balances of temporary accounts show?

SLIDE 4

ANSWER

Changes in the owner’s capital account for a single fiscal period

Lesson 8-1

© 2014 Cengage Learning. All Rights Reserved.

Lesson 8-1 Audit Your Understanding

3. List the four closing entries.

● 8-1 Work Together on Front Board

SLIDE 5

ANSWER

1. An entry to close income statement accounts with credit balances.

2. An entry to close income statement accounts with debit balances.

3. An entry to record net income or net loss and close the Income Summary account.

4. An entry to close the owner’s drawing account.

Lesson 8-1

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General Ledger Accounts after Closing Entries Are Posted

SLIDE 6

LO2

Lesson 8-2

When an account has a zero balance, lines are drawn in both the Balance Debit and Balance credit columns

© 2014 Cengage Learning. All Rights Reserved.

General Ledger Accounts after Closing Entries Are Posted

SLIDE 7

LO2

Lesson 8-2

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Post-Closing Trial Balance

● A trial balance prepared after the closing entries are posted is called a post-closing trial balance.● Only general ledger accounts with balances are

included on a post-closing trial balance● Permanent accounts (assets, liabilities, owner’s capital)● Temporary accounts (INCOME SUMMARY, revenue,

expenses, and drawing) are closed and have zero balances, so they don’t appear on a post-closing trial balance

SLIDE 8

LO2

Lesson 8-2

© 2014 Cengage Learning. All Rights Reserved.

Post-Closing Trial Balance

SLIDE 9

LO2

Lesson 8-2

SingleRule

4

7 Record Totals

Heading 1

6Totals

8Double Rule

AccountTitles

2

5Compare Totals

Account Balances

3

© 2014 Cengage Learning. All Rights Reserved.

Accounting Cycle for a Service Business

● The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle.● Concept “Accounting Period Cycle”

● Class Activity: 8-2 WT● Complete as class by explaining answers to

different parts of problem (answer and where you found it specifically)

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LO2

Lesson 8-2

© 2014 Cengage Learning. All Rights Reserved.

Group Activity:● In groups of 2, create a poem/song about the process we have

undergone in this class from the time a transaction was identified to the point at which we reached today.

● **Hint: remember to include ALL types of journal entries**● **Hint: you have used five different spreadsheets to do all of the

accounting work thus far, with the exception of the checking account chapter work…one spreadsheet is used twice**

● You will also create an illustration to accompany your poem/song while you present so that we can visualize the process you are explaining

● Presentations to follow● Once each presentation ends, we will have a class evaluation of groups’

accuracy using a scale of 1-5 on white boards● Class Discussion about which items were correct/incorrect in each cycle

SLIDE 11

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Accounting Cycle for a Service Business

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LO2

Lesson 8-2

2

3

4

5

6

1

7

8

8. Prepare post-closing trial balance

7. Journalize and post closing entries

6. Prepare financial statements

5. Journalize and post adjusting entries

4. Prepare work sheet3. Post2. Journalize1. Analyze transactions

© 2014 Cengage Learning. All Rights Reserved.

Lesson 8-2 Audit Your Understanding

1. Why are lines drawn in both the Balance Debit and Balance Credit columns when an account has a zero balance?

SLIDE 13

ANSWER

To assure a reader that a balance has not been omitted

Lesson 8-2

© 2014 Cengage Learning. All Rights Reserved.

Lesson 8-2 Audit Your Understanding

2. Which accounts go on the post-closing trial balance?

SLIDE 14

ANSWER

Only those with balances (permanent accounts)

Lesson 8-2

© 2014 Cengage Learning. All Rights Reserved.

Lesson 8-2 Audit Your Understanding

3. Why are temporary accounts omitted from a post-closing trial balance?

SLIDE 15

ANSWER

Because they are closed and have zero balances

Lesson 8-2

© 2014 Cengage Learning. All Rights Reserved.

Lesson 8-2 Audit Your Understanding

4. What are the steps in the accounting cycle?

SLIDE 16

ANSWER

1. Analyze transactions.2. Journalize.3. Post.4. Prepare work sheet.5. Journalize and post adjusting entries.6. Prepare financial statements.7. Journalize and post closing entries.8. Prepare post-closing trial balance.

Lesson 8-2

© 2014 Cengage Learning. All Rights Reserved.

Question then CLOSE

● Create questions regarding chapter 8 that you feel are essential to answer in order to be able to complete closing entries and the post-closing trial balance● Others will ring bell if they know the answer

● Create an alternate method of the accounting cycle that you believe would be more efficient/effective when taking a transaction and working toward a post-closing trial balance – be innovative!

SLIDE 17