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To Be Uploaded 2 Fabm 1 PS 11 Q4 1006
To Be Uploaded 2 Fabm 1 PS 11 Q4 1006
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Accounting Cycle for
Merchandising-Type
Businesses: Closing
1
Every beginning always
has an ending. That is
why a merchandising
business's last cycle is
the preparation of
closing entries before
the start of another fiscal
year.
2
From here,
merchandising
businesses may make
an economic decision
and see the bigger
picture of how the
business performs.
3
Quick Look
Blue Clothing Line
You have been an accountant for Blue Clothing for a
year now. The business provides smart casual clothing
for kids and teenagers and has been operating for
several years. Despite being in the industry for several
years, Blue Clothing does not have the resources for
accounting software due to its budget limitations. As
the business's accountant, it means that you must
prepare all steps in the accounting cycle manually.
4
Quick Look
Blue Clothing Line
It is the end of the month, and you have prepared
a post-closing trial balance. Before submitting the
report, you noticed that revenue accounts are still
listed in the trial balance. This situation leaves you
with the task of making a sound decision on what
to do with this kind of error before submitting the
report to your supervisor.
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Quick Look Questions to Ponder
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Learning Competency
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Learning Objectives
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● A journal entry
prepared at the end
Closing
of an accounting
period
Represents the
Entry
●
transfer of balances
from a temporary
account to a
permanent account
9
Merchandising
businesses use
Closing closing entries to
reset the
Entry balances of
temporary
accounts.
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Definition and Purpose of Closing Entries
In accounting, we often
refer to the process of
closing as closing the
books. The four basic steps
in the closing process are:
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Steps in Closing Temporary or Nominal Accounts
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Steps in Closing Temporary or Nominal Accounts
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Steps in Closing Temporary or Nominal Accounts
Sales xxx
Purchase Returns and Allowances xxx
Purchase Discount xxx
Income Summary xxx
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Steps in Closing Temporary or Nominal Accounts
Purchases in accounting refers to the taking control of a given item or service by paying a
set amount of money.
Sales returns and allowances are refunds or credits given to customers for returned
products or products that they are allowed to keep without full payment. Sales returns and
allowances are deducted from sales revenue when net sales are calculated.
Sales discount is an incentive the seller offers in exchange for prompt payment on credit
sales.
Cost of goods sold (COGS) includes all of the costs and expenses directly related to the
production of goods.
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Steps in Closing Temporary or Nominal Accounts
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Steps in Closing Temporary or Nominal Accounts
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Steps in Closing Temporary or Nominal Accounts
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Steps in Closing Temporary or Nominal Accounts
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Steps in Closing Temporary or Nominal Accounts
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Dream Athletics Co.
Sales 30,000
30
Dream Athletics Co.
Purchases 50,000
Income Summary
129,000 30,000
99,000
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Check Your Progress
Answer area
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Preparation of Post-Closing Trial Balance
(Name of Business)
Post-Closing Trial Balance
December XX, 202x
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Preparation of Post-Closing Trial Balance
Using the financial data of Dream Athletics Co., get the ending
capital account of the business.
Dream, Capital
48,000 1,500,000
99,000
1,353,000
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Preparation of Post-Closing Trial Balance
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Keep in Mind
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Photo Credit
Slide 1: Business Calculation Finance, by mohamed_hassan is free to use under the Pixabay License via Pixabay.
Slide 3: Detective Male Adult, by mohamed_hassan is free to use under the Pixabay License via Pixabay.
Slide 4: Accountant Calculator Accounting , by mohamed_hassan is free to use under the Pixabay License via Pixabay.
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Bibliography
Boyd, Ken, et al. Accounting for Dummies: All in One. NJ: John Wiley & Sons, Inc, 2014.
Gilbertson, Claudia and Mark Lehman. Century 21 Accounting. Ohio: South-Western Cengage Learning, 2008.
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