Task 4 Closing entries

Once you have completed the data entry for the above tasks, you need to prepare and record the closing entries so that you can prepare your financial reports.

Step 1 Prepare a General Ledger Trial Balance to ensure that your General Ledger Balances.

Step 2 Prepare the General Journal entry to transfer the opening inventory to the P&L Summary, and to account for the Closing Inventory via the P& L Summary Account also (the final balance in your Inventory ledger account must be the final inventory for your balance Sheet as at 30 June 2019).

Step 3 Post the Closing entry to the P & L Summary Account and all the individual income and expense accounts. Please ensure that, after posting the entry, ALL your income and expense accounts have zero balances. The balance in your Profit & Loss Summary Account will be the profit or loss for the period ended 30 June.

Step 4 - Prepare a General Journal Entry to transfer the balance in the Profit & Loss Summary Account to John Banners Capital Account and post the entry into the General Ledger. The balance of the Profit & Loss Summary Account should now be zero.

The only General Ledger accounts left with a balance should be Balance Sheet Accounts.

Step 6 Prepare another Trial Balance of your General Ledger (which should be Balance Sheet accounts only) and ensure that it balances (ie DR=CR)