Explanation of Journal Entries
Analyzing The Facts & Prepare Journal Entries to Ledger Accounts
The accounts that need adjusting are Interest on the bank loan, the depreciation on the Furniture and Fixture and the insurance. We need to calculate the interest for the month on the Bank loan. We also need to adjust this month’s depreciation, and finally we need to adjust the insurance expense for this month. This adjustment’s need to be made, so we can deduct the interest, depreciation, and insurance for the month.
Closing Entries & Post to Ledger Accounts
The new ledger accounts that are required for our closing entries are Income Summary and Retained Earnings, we need this entries so we can close Sales, Cost of Sold and all the expenses accounts.