Accounting 1: Program #14 – “Intro to Closing Journal Entries”

Alright right here we are once more lets dive right
in reason I obtained a great deal I desire to experience today the introduction stated the title said intro
to closing journal entrances we actually have a couple of eleventh hour points in concerns to phase
The rivals earn an ordinary revenue margin of fifteen percent. That offers us 9 factor seven -percent? Equal revenue margin is constantly something you ' d want to be high?
obvious certainly this company ' s in contrast to their competitors profit margins pretty low a fair bit lower any concerns on that? I ' m guessing that didn ' t reason you keep up all evening asking yourself how to do it.Let ' s take a look after that currently at quick research study three point three whoops I existed exercise 3 point

3 right? Now we ' ve done a great deal of journal entrances adjusting journal entries place ' t we? We did all those handouts I provided'you we currently did some things in the book below ' s an additional one in the message publication you all require to be seeing to it you ' re getting proficient at doing these I wish you feel'much better doing them currently than you did a week back. If you ' re still considering these if you ' re still looking at something exist workout three factor 3 as well as'you ' re just obtaining them incorrect after that you ' re.
kind of behind then we need to get you to tutoring or obtain you'to the office hrs or.
whatever we need to do however I want you to begin really feeling good regarding doing these readjusting journal. entries.Alright let ' s take an appearance actual quick exercise there aim 3 prepare adjusting.
Ok a devaluation on the company ' s equipment of 2 thousand and also a eleven is. Computed to be sixteen thousand dollars? Alright allow ' s take an appearance at that that ' s our.
Alright currently you individuals can ask me concerns. How a lot. Fifty 9 sixty was made use of up so we decrease our pre paid insurance policy.
The December thirty one two thousand. As well as eleven physical count revealed 3 hundred and fifty four of products offered? What they did here is they did a little t account for workplace products they place in.
was used up? Twenty 6 twenty 6? Alright twenty six twenty 6 so we decreased our workplace.
products as well as we debit our supplies expense is that appropriate? Inquiries? Ok D one fifty percent.
of the job associated to ten thousand bucks of money obtained in sophisticated performed this.
period so we can relocate that a person fifty percent ten thousand or five thousand out of unearned income as well as. into earnings or fee earnings as they state deal with? Alright E the pre-paid insurance policy account had.
a fifty six hundred debit balance of December thirty one two thousand and eleven prior to.
changing for the cost of expired protection an analysis of the protection that six hundred.
bucks had run out now this one is worded in different ways isn ' t it? They are not telling.
us the finishing equilibrium and also require us to back into the amount that was consumed and also the amount. that was used up or ended is the quantity that gets expensed in this situation forty six. hundred dollars so we debit insurance coverage expense as well as we credit score pre-paid insurance policy right?
You. think we well have any of these on the test? Obviously we will certainly right so if you put on ' t understand.
just how to do these how well do you think you will do on the test? Not real well appropriate? Alright F wage expense of four thousand bucks has been sustained but not paid as of December.
thirty one two thousand as well as eleven so the AJE there is we debit wage ' s expense and we. credit wage ' s payable alright? Any questions on workout three-three ok, no inquiries on.
Alright let ' s take an appearance this is one of those. And also it states there ' s. 5 workers each of whom earn a hundred bucks per day so what is the daily payroll? Worked only 4 days since New Year ' s Day was an unsettled holiday.Ok so this day
Show the adjusting. entry that will be videotaped on Monday December thirty one 2

thousand and eleven ok so
we. are doing our financial statements since completion of this day deal with? So we have to build up. how lots of days of work? Just one and just how much is our everyday pay-roll? Our twenty thirty. one is it a eleven AJE is a debit to incomes cost I believe they state incomes put on ' t they. and also then credit rating to wages payable for how much? Five hundred dollars you with me did you obtain. that? And they additionally desire us to do
bear in mind considering the calendar they ' ll get paid Friday. for today we didn ' t pay them that day were just accumulating it there ' s no money being'.
attributed right below okay so currently what day will they make money them particularly what? The fourth is that proper? This is not an AJE yet this an journal entry how much. cash is heading out on the January fourth?
Because this day was an unsettled holiday, 2 thousand. They ' re'getting paid for one 2 three four times the day-to-day pay-roll five hundred. 2 thousand and currently just how much of that has not been expensed yet requires to be? Fifteen. hundred three days ' worth ok so well debit incomes expenditure I ' ll abbreviate a little for. fifteen hundred and also what obtains debited for five hundred? Incomes payable that ' s not a AJE. but that is a subsequent journal access we made so take an appearance at that in
relationships to. that schedule above.Questions? “Will you offer a calendar type bargain on the test?”.
will I supply a schedule? No I most likely wont yet you can jot one down actual quick the only. reason I do it right here if I do it quick it will be all untidy however you can jot one down. I ' ll offer you a hint
there are seven days a week ok Sunday, Monday, Tuesday, Wednesday,.
Thursday, Friday, Saturday

you understand I had “a trainee once he asked me this he claimed will. you give us the checklist of
the months and also I resembled I didn ' t recognize what he meant. As well as. I stated what do you imply
as well as he stated January, February, March April, May he didn ' t know. the order of the twelve months. “Like in English he didn ' t understand?” Yeah no he simply didn ' t recognize.
He says I never actually memorized it as well as I claimed you understand what it ' s time to memorize ok.
No so okay concerns? Yeah” I. appear to always create wages instead of incomes” I won ' t take of but try to once more the distinction. I ' m going to provide you some much more.
When I provide you your research today yet we ' re going to relocate, chapter 3 AJE homework.
on to chapter four ok. Alright oh wait I lied we have to discuss another thing in phase. three we have a little left in chapter three I always fail to remember to do this component so. Take a. look at the chapter 3 power factors ok we discovered what a trial equilibrium is? Now I didn ' t tell you this but truly what we were teaching is in phase two that is. What we call an unadjusted test equilibrium due to the fact that we hadn ' t made the adjustments yet? Currently this type of a little worksheet and also this is probably
mosting likely to be difficult to read for you. folks in the house you could wish to check out the PowerPoint '
s you published off of what we have. right here is allow me see if I can obtain my pointer going here.In this column right here'we have. we have what we call the unadjusted trial balance it just says trial balance yet it. probably simply state unadjusted trial balance'and that is just that the unadjusted trial. equilibrium currently what we do is the way that we can type of see what ' s occurring with these.
When we make our AJEs they are in these center columns, modifications. Ok its in these middle. columns and also for instance I ' m not great at creating with a

mouse I apologize that ' s. expected
to be AJE ok sorry concerning that however like right here we attributed pre-paid insurance policy.
for one hundred and down here we debited insurance coverage cost for one hundred you see that so that ' s. where they uploaded for that entrance for pre-paid insurance coverage that we made ok.
And in access B. they debited supplies expense for one oh five oh and also they attributed materials for one oh 5
. Oh I won ' t go through each one however you can see what they ' ve done? And afterwards what'.
we do is the last 2 columns now in blue are what we call the modified test balance. this is the trial equilibrium that has the changes uploaded ok.So for instance take an appearance at products,. supplies over here had a ninety 7 twenty equilibrium before adjustment we changed and. lowered modification one oh five oh and also now it has a balance an
modified balance of eighty. six seventy currently a few of the accounts put on ' t have changes posted to them but a great deal. of them do as well as you can see in those blue columns those are the modified numbers that ' s the. readjusted trial equilibrium are you with me? Now we don ' t do as most of these as we utilized to. when I remained in school we did

a great deal of these I would certainly distribute worksheets we would practice. doing this. Why don ' t we do that as much currently? Since we don ' t treatment concerning, why do you believe. our students as high as we utilized? No computers you ' re best
Jake the computer system just does this. you put on'' t even know what ' s going on ok I mean it simply does it and you desire to know what. it ' s doing yet we simply put on ' t spend as much time publishing to T account and doing all this. stuff'you need to recognize just how to do the journal entry that ' s for sure the computer system is not. going to make the journal entrance for you.But when you make the journal entrance it will certainly publish. it to the journal does that make good sense? Now looking back at this we have readjusted test. balance to the clear left and also our un-adjusted test balance to the clear right which do.'we make monetary'statements off of? The changed that ' s why we are doing these AJEs fix? We are doing these modifications to once again what were the functions of AJEs? To change a possession.
or an obligation account to its appropriate amount and also to either book or cost or earnings so.
we prepare our financial statement s off our readjusted test balance that ' s the factor in. When we prepare the economic declarations after we have our adjusted trial, the process. balance is that cool? Makes good sense? You can review that in your book I didn ' t desire.
to invest a great deal of time discussing but again I desire you to understand once more we are making. these changes for these AJEs to readjust accounts so they ' ll be reflected correctly. on the financial declarations ok.Alright audio good alright ok any inquiries on anything.
else in relation to that? If you would they, I guess I can look back at the computer system once again.
just provide you example in your slides regarding how you use that adjusted trial balance to. initially prepare the revenue statement and after that you prepare the statement of equity and after that. you prepare you annual report ok. And also I think that ' s it and after that well speak about profit. margin alright we are currently performed with chapter three besides some'I ' m going to keep offering.
you some AJE chapter 3 research just to keep you on your toes ok good. Remember we.
are going to start chapter 4 today your next test mores than phases three and also four.
For you individuals at home it ' s in the syllabus.
Allow ' s take an appearance at chapter four and also'this is going to be on completing the account cycle. Pay attention.
Alright here ' s the deal closing process what it does is it. And were going to discover. Ok so let ' s. state you understand were going with this video game were keeping track of runs no one scores the.
nobody scores the 7th inning the residence team scores one and also the visitors rack up 3. so currently it ' s in fact tied 3 to three isn ' t it? Okay eighth inning no one ratings home group. This should be nobody appropriate me it ' s constantly site visitors and residence on lower? Come one. individuals however the very same point site visitors versus home and after that the nine inning the visitor ' s group. is up to bat they wear ' t score any type of runs home they score a run and also now what ' s the grand. Overall 3 to four, home team wins? As well as we kept track during this video game we
kept. track of the runs and afterwards after the game is over for the home group we placed one win proper? And after that for the next video game do we keep an eye on all these runs and also stuff? No we begin over. don ' t we and we are going to play a whole brand-new ballgame and also all that type of stuff ok. And also all that is that of the very first video game is kind of that showed up there? We. sort of cleared out the results of this game into a win loss
situation we have one win. And absolutely no losses? Coming off of that the closing'process
if I considered income. statement for sprint it would certainly tell me maybe the profits and also the expenses for the last. Year? Is it mosting likely to reveal me the earnings and also expenses that, that firm has actually earned. since they began a hundred years ago or whenever they started no we sort of inherently. know this but at some point we wipe the slate clean and also we start over again'and also we begin. at no and start developing our costs and also profits right? Has anyone worked a sales. task where you earned money commissions on your sales anyone no? As soon as, well I had a student. who offered utilized automobiles and also it ' s similar to it remains in the television programs as well as the motion pictures where they. have a white board up there as well as every body ' s name as well as every time you make a sale they put. your number there so through the month your hoping your number develop up and your maintaining. track of how everyone ' s doing and its generally really affordable right? However then what do you. think they do throughout the next month with that white board? They remove as well as they start over. once more that ' s what the closing procedure is returning to the slides going back to the slides. the closing procedure resets incomes cost as well as take out accounts to no at the end of. the period as well as it sort of purges the outcomes of that period right into the revenue summary account.
and ultimately some various other accounts currently the first thing we need to do we need to determine.
Ok this is essential take
a look at your screen here below me get a drink. Alright there are long-term accounts permanent accounts are not shut they are irreversible.
If you had cash in your bank that ' s a possession for your, off the screen for a 2nd Jake.
company fix? And let ' s claim in December thirty very first 2 thousand and also eleven you had.
You still have the money they don ' t. absolutely no out your cash money account however it functions that way with obligations to? Anna
let ' s say state have a thirteen thousand dollars bucks automobile lending December thirtyInitially January one 2 thousand and twelve rolls around do you still.
have that responsibility or did they zero it out? You still have it we don ' t close out assets. as well as obligations do you
recognize that?Nor do we liquidate proprietor'' s capital we just close
out short-term accounts irreversible accounts going back to the slide irreversible accounts
do not close those are our properties, obligations, owner'' s capital.What do we

close we close
our temporary accounts short-term accounts are our income accounts are cost accounts
Alright what
we are going to do let'' s see right here I desire you to keep these 4 action in mind however were mosting likely to function via an instance below were mosting likely to work through an example as well as I believe it will be finest found out that way ok.Let ' s just take an actual and also I'' m just revealing you a partial ledger here. I just made up some accounts below some profits some expense accounts as well as this is what we are looking at. Through the business has 2 profits accounts seeking advice from income as well as various earnings and it has a credit balance of twenty two and also five thousand and after that they have 3 cost accounts rent out expenditure advertising expense and also salary expense account and also those have equilibrium of eight thousand, fifteen hundred as well as 5 hundred.Ok what is the first closing entry that were going to make? What do we do what ' s the initial one? We close the revenue accounts so the initial point we are going to do is close the revenue accounts. Ok what was the next ok any type of concern on the first closing entrance?
Our second closing entry is to close the cost account. Now do expenditure accounts have a typical
debit or credit history balance account? They have a typical debit balance account so what do we need to
do to close these out what do I have to do to shut rental fee expense? I have to
attribute it for 8 thousand

currently it has an absolutely no balance.I have to credit score advertising and marketing expenditure for fifteen hundred bucks now it has an absolutely no equilibrium. I need to credit rating wage expense for 5 hundred dollars now it has an absolutely no balance'. What ' s the journal access we make to complete that? Well were going to credit report rent cost advertising and marketing expense and salary expense for 8 thousand fifteen hundred and 5 hundred specifically currently remember this is a journal access this is the credit scores column this is the debit column you see what I'' m doing below? I simply credited those 3 expense accounts allow me draw it down right here so you can see it. I credited these 3 expense accounts now the debit just how much does that include up to? Uh ten thousand doesn'' t it? Ten thousand that ' s an eight thousand so I believe its 10 thousand as well as what you believe we debit? We debit revenue summary.Ok so have a look at the second closing and also the first entrance entry the first one we shut the income accounts after that we closed the cost accounts have a look at that ask questions if you don ' t understand, yet do you see what we ' re doing? You see what'we ' re doing these are our closing access we made this will certainly be the affects after they ' re uploaded it to the journal and also sure sufficient these momentary accounts have zero balances when we are all done does that make good sense
? Ok what is the third closing entrance we need to make? You understand return as well as consider it what does it claim? What does it claim? Shut the income summary account right back there close the income recap account to owners ' resources right? We ' ve done those initial access now we ' ve closed the income account to earnings recap and we'closed the cost account to revenue recap you with me? Alright now what I desire you to do or what I want to do is shut the revenue summary account to owner ' s. funding currently I still require to speak about that income summary a little bit however let ' s return below. allow ' s do a t account'for earnings recap, allow ' s do a t make up revenue recap I don'' t. want it to come to be part of that so I ' ll
sort of keep it separate we credit it for twenty. 7 thousand thousand? We debited for ten thousand you with me? So what ' s the. balance of earnings recap currently? What is it seventeen thousand? On the debt side. remedy? If we have a net income revenue scenario do we, currently let me ask you this
do we know. not have sufficient info? Do you recognize? “it appears we have an internet earnings ' we have a net “income. why do you claim that? “because are profits are more than our expense extremely excellent Sarah. are profits recalling our revenues completed twenty seven thousand our expenses completed. ten thousand so we have a net income of seventeen thousand don ' t we? Earnings are above. costs currently our third closing entrance as this specified is to close revenue summary account. to proprietors ' resources correct? You with me? What do we do here? If I intend to shut this. income summary account as well as I do what do I require to do to it? If I intend to have this have. a zero balance what do I have to do with it? I need to debit it for just how much? Seventeen. thousand currently it has a no balance correct would
you concur? Currently the third closing access. the 3rd closing access would certainly be this is we close earnings recap to funding that we do. that by saying ok we are mosting likely to need to debit income summary for seventeen thousand. bucks as well as what do we credit score remind of what I simply say we close it to capital. that is our third closing entry.Ok take a look at those three now I can ' t show them. all on the screen does this make any type of sense people? Closing access is just one of those points.
Because it ' s truly, that if you ' re a student I wish there ' s a whole lot of shutting entries. not hard you'shut all the revenue accounts then you close all the expense accounts then. you need to do a t account. You need to do a t account
to recognize the amount that enters. the third closing access you need to do this wear ' t try to faster way it folks make your t. account as well as post your earnings recap to it twenty seven thousand buck debt ten thousand. bucks debit it has a seventeen thousand equilibrium thus I require to debit it seventeen. thousand in that third closing entry this amount just originated from a t account. When. I see these confiscating amounts on your tests I such as to see a t account someplace therein. after you ' ve the initial two so you recognize what totals up to place in the 3rd one make sense? Inquiries now I understand we are refrained however are there any type of concern on the very first three closing. entries? Currently come off that for a second currently we have one more closing entry we ' ll perform in. a 2nd I asked if we have a net loss or a net income'circumstance
as well as you said precisely. that we have a take-home pay circumstance is that right? Have a look at that third entry that. shutting entrance this must make feeling do you remember I asked you what are the two things. that increased capital what are the two things that decreased funding as well as all that and afterwards. we discovered the declaration of equity and we saw that take-home pay boosts resources
remember. that just how we done declarations of equity well funding is funding a regular debit or a typical. credit rating equilibrium account? When we attribute it in, it ' s a regular credit history balance account thus. this'3rd closing entry what are we doing are we increasing it or lowering it? You. tell me? We ' re increasing were crediting it it ' s a credit rating balance account it ' s going up. its boosting that must make good sense because you informed me correctly this is an internet earnings. situation and wear ' t we understand from the statement of equity that internet
revenue enhances resources. does that make good sense individuals? Don ' t just remember these in a feeling I don ' t understand what he ' s is. doing but if this is what he wants me'to do I ' ll do it no I want you to be able to comprehend. it ok.Once once again allowed ' s consider those first three shutting access we close incomes once again. this is not a monetary declarations these are journal entrances I know students are
making. blunders when I see lines there and I see things like total no these are not a revenue. statement these are closing journal entrances yet we close the profits we needed to debit
. them due to the fact that they had debt equilibrium as well as we needed to zero them out we close the cost. accounts by crediting them okay as well as we did this to income summary then we identified the. balance of revenue summary was as well as we required to close it to make sure that ' s our third closing access. so we had a net earnings situation so it makes sense that funding is being credited or raised. ok currently some trainees have actually asked what is this revenue recap as well as they ' ve been good students. now they ' re educated well right into thinking the complying with ok we have a brand-new account here I. would like to know what kind of account it is and I need to know If it is a debit or credit.
balance account I require to know what monetary declaration it is revenue summary is type of. an amusing little account due to the fact that it ' s not really it doesn ' t have a typical debit or debt balance. account it ' s not discovered on any monetary statement it'' s simply type of a t account that we make use of. it has an extremely brief life it ' s a t account'for the closing procedure then it obtains zeroed. Out it'' s a momentary account? Keep in mind the listing of momentary accounts it'' s one of. the temporary accounts as well as it is zeroed out and afterwards were finished with it doesn'' t show upon.
any economic statement it'' s not a regular debit or credit report balance account it'' s simply. kind of like a t account where we toss things for a while during the closing procedure does.
that make feeling? Kind of unusual I constantly type of correspond to a blending dish you ever make cookies? You ever make cookies Jessica? Ok what do you have you have a mixing bowl right you.
got a mixing bowl place your chocolate contribute there you place your flour in there fracture.
A few eggs placed some vanilla in there put some brownish sugar? And after that you mix all of it.
up right blend all of it up in the blending dish and afterwards you take it out of the blending bowl.
You could do it but it ' s a whole lot less complicated. It'' s a debit equilibrium account so what do we have to do to. Capital for 9 hundred bucks withdrawals has a normal debit balance account it'' s a. regular debit equilibrium account, thus to close it we have to credit rating there is no relevance.
that that one is red and also one is black except I got the incorrect marker. Now this should.
make good sense though reason did you just tell and we'' re mosting likely to look at a pair of mins.
over ok I'' m not going to charge you added, yet this need to make good sense due to the fact that isn'' t withdrawals. that decreases resources from the statement of equity? And also take a look at this fourth access you.
informed me credit history equilibrium account thus when it is being debited we'' re reducing it right? Make good sense ok any questions on those shutting access? “” I have a concern because the income.
If you have a net loss would you just, summary does it have a normal credit equilibrium account.
do the journal access?”” yeah fantastic inquiry Kim what she was asking what about in an internet.
loss scenario we'' re mosting likely to eventually do one that is a net loss yet you'' re precisely.
right ok.So what I desire you to concentrate on tonight folks is this I desire you to understand.
those 4 closing entrances does that make good sense? Let me give you your research ok.
what I desire you to do and also currently remember to utilize your job papers in the back of your book.
are you8 men making use of those? I believe they'' re extremely useful I imply not in the back of the.
book I think they sell them independently wear'' t they? So utilize those job paper ' s you can always.
return and see what exercise what you'' re meant to be functioning on yet it will certainly provide.
you templates and t accounts as well as things. Ok for house work I desire you to do exercise three.
2 currently this this is changing journal entrances ok so wear'' t obtain confused this is still phase.
I ' m going to provide you separate … I ' m going to provide you various guidelines I desire. Exercise four two is down below do you see.
it down here? workout 4 2 I want you to refrain what they'' re asking you to do now.
this is vital I want you to use this workout four factor two and I desire you to upload closing.
access for that information.Post the four closing entries for this info does. that make good sense? Neglect the guidelines they are providing you put on ' t do that simply utilize the. 4 factor 2'details as well as post the 4 closing entries is anybody uncertain on that particular? Ok so your homework is exercise 3 factor two adjusting journal access and also then workout. 4 point two with unique guidelines cool down? Alright thanks man
' s see you.

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