LESSON 6-2
Planning Adjusting Entries
on a Work Sheet
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
ADJUSTMENTS
page 161
 Matching Expenses with Revenue
 Accounting concept where revenue and expenses from the
revenue must be recorded in the period where the revenue
was earned
 Sometimes a business may buy an asset (supplies) but not
use all of the asset during the accounting period
 Adjustments
 Changes recorded on a work sheet to update ledger
accounts at the end of a fiscal period
 Gives accurate information on financial statements
 Worksheet plans for these adjustments
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
3
SUPPLIES ADJUSTMENT ON A
WORK SHEET
 Supplies account balance
 Supplies on hand
 Supplies used during August
page 158
$1,025
-$310
$715
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
4
PREPAID INSURANCE ADJUSTMENT
ON A WORK SHEET
page 159
 Prepaid insurance balance
$1,200
 Insurance unused
$1,100
 Insurance used during August $100
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
5
PROVING THE ADJUSTMENTS COLUMNS
page 160
OF A WORK SHEET
1
2
1. Rule a single line.
2. Add both the Adjustments Debit and Credit columns.
Write each column’s total.
3. Rule double lines.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
3
LESSON 6-2
6
PREPARING A WORK SHEET
page 160 C
1. Write the heading.
2. Record the trial balance.
3. Record the supplies adjustment.
4. Record the prepaid insurance adjustment.
5. Prove the Adjustments columns.
6. Extend all balance sheet account balances.
7. Extend all income statement account balances.
8. Calculate and record the net income (or net loss).
9. Total and rule the Income Statement and Balance Sheet
columns.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
7
1
2
496400
10000
15000
10000
102500
120000
(a)
(b)
6
71500
10000
20000
5000
500000
4
62500
356500
356500
21300
(b)
10000
(a)
71500
2800
30000
Net Income
8
20000
5000
500000
3
62500
11000
881500 881500
10000
31000
110000
81500
21300
10000
2800
7
30000
71500
5
11000
81500 146600 356500 734900 525000
209900
209900
356500 356500 734900 734900
9
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2