Summary journal is to determine the net profit or loss. This is done by comparing the debit and crit balances in the profit and loss summary account. If the crit balance is greater then the manufacturing company makes a profit. If the debit balance is greater then the manufacturing company experiences a loss. Then close the profit and loss summary account by moving the account balance to the capital account for sole proprietorships or to the retain earnings account for limit liability companies.
If the company experiences
Aprofit the profit and loss summary Estonia Mobile Number List account is on the debit side and conversely if the company makes a loss then the profitloss summary account is on the crit side. The following is an example of a journal Example Profitable company For example manufacturing company ABC has revenues of and expenses of in the accounting period ending December . So the companys net profit is . The closing journal of ABC companys profit and loss summary account is as follows Date Information Debit Crit December Income Summary Capital This entry shows that the income summary account balance of has been clos and add to the capital account indicating an increase in the company owners capital.
Example the company
Makes a loss For example Hong Kong Whatsapp Number manufacturing company XYZ has revenues of and expenses of in the accounting period ending December . So the companys net loss is for XYZ companys profit and loss summary account is as follows Date Information Debit Crit December Capital Income Summary Manufacturing company closing journal entries for private accounts How to make a private closing journal is as follows Debit the capital account and crit the private account for an amount equal to the private account balance. Transferring the private account balance to the capital account.