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Explain what are the four closing journal entries

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Reference no: EM132759645

It is the last day of the month and fiscal year, the manager asks to establish invoice for $10,000 (debiting Accounts Receivable and Crediting Sales) and send it to a specified customer. Normally invoices are sent to customers when products have been shipped or the service has been finished. Manager states that they will be shipping equipment and performing the sehup services for this customer next month (as early as next week).

  • You know that by preparing the closing entries tomorrow, the revenue will be included in this year's fiscal year and then the revenue account will be set to zero for the beginning of the year.

Problem 1: What is the manager trying to accomplish by asking for this to be done?

Problem 2: What should the response to the manager be? Are there any suggestions or alternative ways to be recommend to the manager on how to record this?

Problem 3: How would the company's financial statements (and the users of the financial statements) be affected while recording this entry?

Problem 4: What are the four closing journal entries? Why are these necessary?

Reference no: EM132759645

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