Closing Entries

Always look for revenue and expenses; the numbers have to balance
out!
Debit
1. Revenue

Credit

50,000
Retained Earnings`

2, Retained Earnings

50,000

36,000

Rent
Advert
Salary

3. Retained Earnings
Dividends

6k
5k
25k

2,000
2,000

Reversed Entries
December 31
Salary Expense
Salaries Payable

40k

January 1
Salaries payable
Salaries Expense

40k

January 5
Salary Expense
Cash

100k

Adjusting Entries
Showing what you used that year
ACCOUNT RECIEVABLE GO UP
Acc Receive go down

Debit

Credit
40k

40k

100k

3 subjects
1. Bank reconciliation (or check reconciliation)
2. Petty Cash fund (P.183)
3.

1. Bank Reconciliation
Bank
25,700

Book (if we look at cash this is whats reveleavled

27,675

Deposits in transit, add 3,500

Outstand deposit and checks is all you will see on bank side!
Bank
Book (if we look at cash this is whats reveleavled
25,700
27,675
+ 3,500
(50) Deduct 50 dollars from booking!
-1,500
+25$
+50
____________
___________
27,700
27,700
These have to be even thats why you add the 50 dollars
We want the book side to be the same as the bank side
Bank
22,490
+1885
(1,460)
________
22,915
_________
_________

Book
22,970
(55)
________
22,915
_________
_________

2. Petty cash fund

All you do is establish the fund, or replenish the petty cash fund
What are vouchers?
1. Petty Cash
Cash

500
500

2. Misc. Expense $ 350

Cash Short
50
is an Expense
Cash

(Means we are short 50 dollars cash) This

400

Example #12 on page 199.

1. Petty Cash
400
Cash
400
2. Misc. Expense 370
Cash

370

3.. Statement of Cash Flows

Have 3 components to it
1. Operations
2. Investing
3. Financing

On Test expect 2 or 3 multiple choice questions, and you

have to pick which of those 3 it is in a normal operation or
investment etc
Investing
Selling used equipment? Investing
Buying equipment? Investing
Financing is associated with relationships with third parts
Signing a promissory note that you have to pay back
Paying dividends back to stockholders
Share new stock so new shareholders are on board

All 3 parts of the statement cash flow are the same result, it
is only the operation section thats prepared differently, but
it still all ends the same.
How to calculate cash flow from operations indirect method
Remember, We have accrual, and cash
1. Start with accrual net income, income is taken directly
from income statement
2. Make necessary adjustments to turn to cash
Net income
+ Non Cash Expense
CA (Current Assets) Such as accounts receivable
When current assets go up, we add them normally, but on
operations we subtract. It all opposite for the indirect
method (operations)
CL (Current Liabilities) now we add instead of subtract
CA Subtract
CL Add
---------------Exam Tomorrow
Exam from spring on bb will be there
Debit they stay in line, credit you indent
Account payable: We owe someone something
Account Receivable: Someone owes us
Merchant taking credit card for account P 174 bottom of
page example
D
Cash
4950
Service Fee 50
Service Revenue

C
2,000

Total assets and total equity ALWAYS HAVE A DOUBLE LINE

ON BALANCE SHEET AND INCOME STATEMENT