This is how an expense ledger looks like before closure:
| Salaries Expense Account | |||
|---|---|---|---|
|
Debit |
Credit |
||
|
15 Dec 2011 - Cash |
$2,000 |
|
- |
|
31 Dec 2011 - Cash |
$3,000 |
|
- |
In order to close the account, we must first total both sides. The debit side adds up to $5000 where as the credit side does not have any balance. Therefore, as $5000 is higher than the total of credit side, we write this amount at the end of both sides.
Closing figure is the balancing figure on the credit side which in this case is $5000.
Being an income statement ledger account, the closing balance will transferred at the period end to income statement.
This is how the expense ledger will look like after closure:
| Salaries Expense Account | |||
|---|---|---|---|
|
Debit |
Credit |
||
|
15 Dec 2011 - Cash |
$2,000 |
31 Dec 2011 - Income Statement |
5,000 |
|
31 Dec 2011 - Cash |
$3,000 |
|
- |
|
|
$5,000 |
|
$5,000 |
The closing balance amount of $5000 will be posted in the trial balance in respect of salaries expense.