LESSON 6-1
Creating a Worksheet
Four reasons Accountants use Worksheets;
1. To summarize general ledger account balances to prove that debits
equal credits.
2. To plan needed changes to general ledger accounts to bring account
balance up to date
3. To separate general ledger account balances according to the financial
statements to be prepared.
4. To calculate the amount of net income or net loss for a fiscal period.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Chapter Concepts
Chapter Concepts:
Consistent Reporting: applied when the same accounting
procedures are followed in the same way in each accounting period.
Accounting Period Cycle: Applied when changes in financial
information are reported for a specific period of time in the form of
financial statements.
Matching Expenses with Revenue: Applied when revenue from
business activities and expenses associated with earning that
revenue are recorded in the same accounting period.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
3
PREPARING THE HEADING OF A
WORK SHEET
1
2
page 153
Name of Company
Name of Report
3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Date of Report
LESSON 6-1
4
PREPARING A TRIAL BALANCE ON A
WORK SHEET
2
1
3
5
page 154
1. Write the general ledger
account titles.
2. Write the general ledger
debit account balances.
Write the general ledger
credit account balances.
3. Rule a single line across the
two Trial Balance columns.
4
4. Add both the Trial Balance
Debit and Credit columns.
5. Write each column’s total
below the single line.
6. Rule double lines across
6 both Trial Balance columns.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-1
LESSON 6-2
Planning Adjusting Entries
on a Work Sheet
In two accounts, supplies and prepaid insurance, we
have used some of what we owned. During each
month we used some of our supplies to run the
business and we used a portion of our prepaid
insurance. These are considered expenses for the
business and we must account for the portion we
used during the month we used it.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
6
SUPPLIES ADJUSTMENT ON A
WORK SHEET
page 158
2
3
1
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
7
PREPAID INSURANCE ADJUSTMENT
ON A WORK SHEET
page 159
2
3
1
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-2
8
PROVING THE ADJUSTMENTS
COLUMNS OF A WORK SHEET
page 160
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
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LESSON 6-2
9
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
10
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
LESSON 6-3
Extending Financial
Statement Information
on a Work Sheet
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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EXTENDING BALANCE SHEET ACCOUNT
page 162
BALANCES ON A WORK SHEET
2
1. Debit balances without adjustments
2. Debit balances with adjustments
3. Credit balances without adjustments
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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3
LESSON 6-3
13
EXTENDING INCOME STATEMENT ACCOUNT
BALANCES ON A WORK SHEET
page 163
1
2
3
1. Sales balance
2. Expense balances without adjustments
3. Expense balances with adjustments
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-3
14
RECORDING NET INCOME, AND TOTALING
page 164
AND RULING A WORK SHEET
4
1. Single rule
2. Totals
3. Net income
3
4. Extend net income
5. Single rule
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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1
2
7
5
6. Totals
7. Double rule
LESSON 6-3
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CALCULATING AND RECORDING A NET
LOSS ON A WORK SHEET
page 165
1
3
1.
2.
3.
4.
Single rule
Totals
Net loss
Extend net loss
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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2
LESSON 6-3
LESSON 6-4
Finding and Correcting
Errors on the Work Sheet
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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CORRECTING AN ERROR IN POSTING
TO THE WRONG ACCOUNT
page 168
2 Correct entry
1 Incorrect entry
1. Draw a line through the entire incorrect entry. Recalculate the account
balance and correct the work sheet.
2. Record the posting in the correct account. Recalculate the account
balance, and correct the work sheet.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-4
18
CORRECTING AN INCORRECT AMOUNT
page 169
2
1
3
1. Draw a line through the incorrect amount.
2. Write the correct amount just above the correction in the same space.
3. Recalculate the account balance, and correct the account balance on
the work sheet.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-4
19
CORRECTING AN AMOUNT POSTED TO
THE WRONG COLUMN
page 169
2
1
3
5
4
6
4. Draw a line through the incorrect item in the account.
5. Record the posting in the correct amount column.
6. Recalculate the account balance, and correct the work sheet.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 6-4
20
TERMS REVIEW
Adjustments
Changes recorded on a work sheet to update general ledger accounts at the
end of the fiscal period.
Balance sheet
A financial statement that reports assets, liabilities and owner’s equity on a
specific date.
Fiscal period
The length of time for which a business summarizes and reports financial
information.
Income statement
A financial statement showing the revenue and expenses for a fiscal period.
Net income
The difference between total revenue and total expenses when total revenue
is greater.
Net loss
The difference between total revenue and total expenses when total
expenses are greater.
Trial balance
A proof of the equality of debits and credits in a general ledger.
Worksheet
A columnar accounting form used to summarize the general ledger
information needed to prepare financial statements.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 166
LESSON 6-3