be a debit or a credit to profit and loss depending on whether the balance is a gain or a loss. Post all the above entries and bring forward the balance "Income subject to Income Taxes." as: Schedule 8-To Arrive at Total Operating Profit (or Loss) for Year Debit or Credit unallowable and non-taxable expense and revenue, 205; Credit or Debit profit and loss, 215 with the balance of unallowable and non-taxable expense and revenue, 205. Post all the above entries and bring forward the balance as: "Total Operating Profit (or loss) for Year." Closing Entry: Transfer this total operating profit, or loss, for the year to surplus earned, 97. CLOSING ENTRIES MANUFACTURING ACCOUNTS When closing the books at the end of the fiscal year, journal entries can be made in the following order posting each entry as made: 1. Debit depreciation and obsolescence expense, 152: Improvements to land, 152A. Buildings, 152B. Machinery and equipment, 152C. Furniture and equipment, 152D. Credit the corresponding provision accounts: Improvements to land, 35. Buildings, 36. Machinery and equipment, 37. Furniture and fixtures, 38. with the amount of depreciation and obsolescence as figured at the rates given in account 34. 2. Debit motor vehicles, maintenance and operation, depreciation, 149E. Credit provision for depreciation, motor vehicles, 39; with the amount of depreciation for the year figured in accordance with the instructions in account No. 34. (It is customary with the majority of accountants to charge an annual depreciation of 25 per cent to 3313 per cent on motor vehicles. However, as a greater depreciation than this may occur in any year, it is better to fix the amount of depreciation to be charged by making an annual appraisement, in which case the amount to be charged off could be carried direct to the investment account without setting up a provision account. By doing this the original investment would be lost in the balance sheet so it is advisable to set up the provision account and, make the deduction in the balance sheet in the same manner as is done in the case of other investment accounts. This will then complete a uniform method in the treatment of these accounts.) 3. Debit insurance, 136; Credit reserve for fire and damage insurance, 86. This entry will be made only in cases where fire and damage insurance risks are carried by the company. Compute the amount of risk on buildings, machinery and equipment and stock, assumed during the year. This will be the difference between the insurable values on the property and the amount actually placed with private insurance companies. Itemize these risks fully. Purchase bonds for the amount of risk to be carried and make cash book entry: Debit bonds, fire and damage insurance fund, 64; Credit cash, 2. 4. Debit motor vehicle, maintenance and operation, insurance, 149C; Credit insurance, 136; with the amount of insurance absorbed during the year on all policies against motor vehicles. List the policies in the journal. 5. Debit warehousing expense, insurance, 180B; Credit insurance, 136; with the amount of insurance absorbed during the year on all policies against "warehoused" or "finished goods." List the policies in the journal. 6. Debit bad debts, 169, listing all the uncollectible accounts; Credit the accounts receivable listed as uncollectable, or if a reserve account is carried, credit the reserve. 7. Debit interest received, 138; Credit interest paid, 139. Transferring the balance of interest received account to interest paid account. 8. To complete finished goods in warehouse stacks as detailed in inventory at close of year. The prices at which the various items of expense are to be figured will fluctuate from year to year owing to fluctuations in cost of supplies and labor. The amounts given are merely for illustration. Debit warehousing expense, 180: Labor, 180A, at 7 cents per case on number of cases. Credit reserve to complete finished and unshipped warehoused goods, 43, with the amount of the above debits. 9. To complete finished goods loose in warehouse stocks belonging to customers as shown by the "warehoused goods record." The prices at which the various items of expense are figured may fluctuate from year to year owing to fluctuations in cost of supplies and labor. Debit warehousing expense, 180: Labor at 7 cents per case on number of cases. Box stock account, 15. List each size box required to finish the goods in the warehouse stacks and compute the amount by taking the current prices of each size required to finish the goods in the warehouse stacks and compute the amount by taking the current prices of each size required. Label stock account, 13, at $3.00 per thousand on thousands required. Nails, strapping and silicate stock account, 16, at cost per case on number of cases. Sales allowances, 192 (swells arising in stacks), at 2 cents per case on number of cases. Selling expense, 183, at 10 cents per case on the number of cases. Brokerage and commission, 181, at 15 cents per case on number of cases. Label stock account, 13, at $3.00 per thousand on thousands required. Nails, strapping and silicate stock account, 16, at cost per case on number of cases. Sales allowances, 192 (swells arising in stacks) at 2 cents per case on number of cases. Credit reserve to complete finished and unshipped warehoused goods, 43, with the amount of the above debits. 10. Debit canned goods sales, 191; Credit sales allowances, 192: Swells and swell allowances, 192B. with the balance of each account transferred to canned goods sales. Debit canned goods sales, 191, Credit sales freight, 193, with the balance of sales freight account transferred to canned goods sales account. 12. The inventory taken at the close of the fiscal year will contain full detail of the amount of unearned insurance to be charged to the following accounts: Insurance, 136. Motor vehicles, 149C. Warehousing expense, 180B. Debit unearned insurance, 60, inventory; Credit insurance, 136. 13. Deduct from or add to, the amount of the balance of seed stock account as shown by the ledger, the value of the inventory of seed at the close of the fiscal year and make the following entry of the result: Debit or Credit green produce, seed furnished farmers, 109. Credit or Debit seed stock account, 8; with the amount of the balance of seed stock account transferred to seed used account. 14. Debit bonuses, factory, 143; Credit the individuals receiving the bonus. List the names of those receiving the bonus in the journal. 15. Take the insurance expense account, 136, after crediting the account with the amount of unearned insurance, 60, warehousing expense insurance, 180B, and motor vehicle insurance, 149C, and make journal entry of the balance: Debit factory financial expense, 135; Credit insurance expense, 136: Taxes, city, county and state, 137. Interest paid, 139. with the amount of the balances of these accounts transferred to factory financial expense. 16. Debit incidental sales and income, 150; Credit factory overhead expense, 140; with the amount of the balance of incidental sales and income account transferred to factory overhead expense account. 17. The following entry will be reversed depending on whether the employees supplies account shows a profit or a loss. Deduct from, or add to, the balance of employees supplies account, the value of the inventory of employees supplies at the close of the fiscal year and make journal entry of the result. Debit or Credit employees supplies account, 17; Credit or Debit factory overhead expense account, 140; with the amount of the balance of employees supplies account transferred to factory overhead expense account. 18. Take the balance of power plant expense account and factory expense account and deduct from each the value of the inventory at the close of the fiscal year. Debit factory overhead expense account, 140; Credit each of the following accounts: Indirect labor. Salary of factory superintendent, 142. Fuel oil, 145B. Electric energy purchased, 145C. Buildings repairs and maintenance, 146. Machinery and equipment, repairs and maintenance, 147. Factory expense, 148. Totals of: Factory sundry expense, 148A. Water purchased, 148B. Gas purchased, 148C. Portable equipment, repairs and maintenance, 148D. Lug box, repairs and renewals, 148E. Cold storage expense, 148F. Motor vehicles, maintenance and operation, 149; Totals of: Oils and gasoline, 149A. Repairs and maintenance, 149B. Insurance, 149C. Service and expense, 149D. Depreciation, 149E. with the amount of the balance of each of these accounts transferred to factory overhead expense. 19. Deduct from the balance of each of the following stock accounts, the value of the inventory taken at the close of the fiscal year and make journal entry of the result: Debit each of the used accounts corresponding to the stock accounts as listed; Credit each of the above stock accounts; with the amount of the balance of each stock account transferred to the corresponding used account. 20. Debit general overhead expense account, 160; Credit each of the following accounts: Administrative salaries, 161. Telephone and telegraph, 164. Stationery, postage and expense, 165. Exchange and collections, 166. Credit information, 167. General expense, 168. Bad debts, 169. Bonuses to office employees, 170. Taxes, corporation and federal, 171; Totals of: State corporation license tax, 171A. State franchise, 171B. Federal capital stock, 171C. Revenue stamps, 171D. with the amount of the balance of each of the above accounts transferred to general overhead expense. 21. Debit unallowable and non-taxable expense and revenue, 205; Credit each of the following accounts: Interest on investment, 206. Life insurance premiums, 208. Income tax expense, 209. with the amount of the balance of each of these accounts transferred to unallowable and non-taxable expense and revenue, 205. 22. Debit each of the following accounts: Credit unallowable and non-taxable expense and revenue, 205, with the balance of each account transferred to unallowable and non-taxable expense and revenue, 205. Revenue received on stocks and bonds, non-taxable, 210. Proceeds from life insurance policies. (This account has not been included in this system.) |