After all of the above closing entries are posted, and this is done as at the close of business June 30, 1922, the profit and loss account appears as follows:
Profit & Loss
Goes to undi vided profits account ....
Closing The Profit & Loss Account. - The entries required to close the balance of the profit and loss account into the undivided profits account are as follows:
Debit: Profit & Loss..............
Credit: Undivided Profits (27)...
The posting of these entries reduces the balance of the profit and loss account to zero as shown above; and it increases the credit balance of the undivided profits account shown in the trial balance from $10,600 to $29,600 and this is the point of contact with the statement of assets and liabilities which will be shown subsequently.