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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 4-5

Purpose: (L.O. 2, 3) This exercise illustrates the preparation of closing entries and discusses their importance.

The recording and posting of closing entries is a required step in the accounting cycle.

Instructions

Refer to the Solution to Exercise 4-2.

  1. Prepare the closing entries for Carl's Video Service, Inc. at April 30, 2014.
  2. Discuss the two reasons why closing entries are prepared.
  3. Prepare a post-closing trial balance for Carl's Video Service, Inc.
  4. Explain why a post-closing trial balance is prepared and indicate what type of accounts will appear on the post-closing trial.

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