Chapter 8

 Can you give me examples????  ______________________________________ ______________________________________ ___________________________________

 Length of time  Accounting period  Can be  Monthly  Six months  Annual  Start and end on any date  Some end during low business activity  Most use Jan. 1 – Dec. 31.

 Four reasons to use a worksheet  Summarize general ledger accounts (Dr. = Cr.)  Plan needed changes to bring account up to date.  Separate general ledger account balances to their financial statement  To calculate the amount of the net income or loss for a fiscal period.

 3 Lines needed 1. Name of the Business 2. Name of the Report 3. Date of the report

 Proof that Dr. = Cr.  Illustration 8-2 on pg. 173  7 Steps 1. Write general ledger titles under account title 2. Enter debit and credit balances from general ledger onto the worksheet under trial balance 3. Rule a single line in the trial balance columns under the last entry

4. Total the debit column and the credit column. 5. Check if the balances equal. (Dr. = Cr.) 6. Write the total of each column under the single line. 7. Rule double lines under the totals in the trial balance columns. The double line means you have verified that the two columns balance.

 Read page 174(bottom) – 178(top)  Examples of Adjustments  Supplies ▪ Supplies Expense XXXX ▪ SuppliesXXXX  Insurance ▪ Insurance ExpenseXXXX ▪ Prepaid InsuranceXXXX

1. What is the balance of Supplies? 2. What should be the balance of Supplies? 3. What must be done to correct the balance???? (Decrease or increase) 4. What adjustment needs to be made? 1. Debit ______________________ 2. Credit ______________________

1. Write the debit amount in the Adjustment debit column on the line where the account you debit is in the account title. 2. Do the same thing with the credit. 3. Label the two parts of this adjustment with a small letter a in parentheses (a). This letter tells you it is the same adjustment 4. View example on pg. 176.

 What does the amount in Prepaid Insurance represent? (circle the correct one) AssetLiabilityor Owners Equity  When do expense insurance?  ______________________________________ ______________________________________ ___________________________________  How do you determine how much? __________________________________

1. What is the balance of Prepaid Insurance? 2. What should the balance be for this account? 3. What must be done to correct the account balance? (Increase or Decrease) 4. What adjustment is made? 1. Debit_______________________ 2. Credit ________________________

1. Write the debit amount in the Adjustment debit column on the line where the account you debit is in the account title. 2. Do the same thing with the credit. 3. Label the two parts of this adjustment with a small letter b in parentheses (b). This letter tells you it is the same adjustment 4. View example on pg. 177.

 3 Steps 1. Continue the single line across the adjustment columns. 2. Add up the debit and credit columns under the adjustment. Make sure they equal. 3. If they equal draw the double lines under the totals in the adjustment debit and credit columns.

 Balance Sheet  Assets  Liabilities  Owner’s Equity A=L+OE  Income Statement  Revenue  Expenses Revenue – Expenses = Net Income or Net Loss

 You need to read the chapter! Reading is important…that is why you may be having a harder time with this class than others!  Make sure you look over pages  Do Study Guide is due at the beginning of the hour tomorrow!