The Profit And Loss Account Illustrated
Description
This section is from the book "Elementary Banking", by John Franklin Ebersole. Also available from Amazon: Elementary Banking.
The Profit And Loss Account Illustrated
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
Credit | ||
$ 5,000 | $ 500 | |
6,000 | 1,000 | |
19,000 | ||
6,000 | ||
Goes to undi vided profits account .... | 3,000 | |
500 | ||
19,000 | ||
$30,000 | $30,000 | |
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.............. | .$19,000 | |
Credit: Undivided Profits (27)... | . | $19,000 |
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.
Continue to:
My Books
