Some people like to play a game that constructs a sequence of chemical elements where each element in the sequence begins with the last letter of its predecessor. For example,….
Explain why closing entries are necessary at the end of the accounting period.
Closing Entries Using T Accounts and Preparation of Financial Statements
The adjusted trial balance for Settles Tennis Club, Inc., at the end of the company’s fiscal year appears below.
1. Prepare T accounts and enter the balances for Retained Earnings, Dividends,
Income Summary, and all revenue and expense accounts.
2. Enter the four required closing entries in the T accounts, labeling the components a, b, c, and d, as appropriate.
3. Prepare an income statement, a statement of retained earnings, and a balance sheet for Settles Tennis Club, Inc.
4. Explain why closing entries are necessary at the end of the accounting period.