LESSON 6-1 Creating a Worksheet 5/2/2019 LESSON 6-1 Creating a Worksheet GREEN

What’s a work sheet? Businesses prepare a work sheet to summarize (list) revenue and expenses for a fiscal period A work sheet is a columnar form used to summarize general ledger information used to prepare financial statements A fiscal period is the length of time which a business summarizes financial information A fiscal period begins the first day of the month and ends the last day of the month most businesses use the full length of year as a fiscal period LESSON 6-1

What goes onto a work sheet? A listing of account titles will come from each ledger Every account title must be listed even if a balance does not exist on a ledger Every account title’s balance will be listed in the Trail Balance column. Each account balance comes from the general ledger’s ending balance. After balances are entered, the total debits and total credits must be equal (proved). LESSON 6-1

PREPARING A TRIAL BALANCE ON A WORK SHEET page 154 2 1. Write the general ledger account titles. 2. Write the general ledger debit account balances. Write the general ledger credit account balances. 1 4 3. Rule a single line across the two Trial Balance columns. 4. Add both the Trial Balance Debit and Credit columns. 5. Write each column’s total below the single line. 3 6. Rule double lines across both Trial Balance columns. 5 6 LESSON 6-1

LESSON 6-2 Planning Adjusting Entries on a Work Sheet 5/2/2019 LESSON 6-2 Planning Adjusting Entries on a Work Sheet GREEN

Planning Adjustments Sometimes a business will purchase an asset during one fiscal period, but not use it until a later fiscal period. When a business uses an asset to generate revenue it is considered an expense This expense should be recorded during the fiscal period that it is used to generate revenue. LESSON 6-1

Planning Adjustments For example, if a TechKnow bought supplies in November, but did not use the supplies until December, the expense of using the supplies should not be recorded until December. If we did not record the usage (expense) of an asset, its balance would continue to get larger and larger. We must adjust each assets’ balance to represent the usage. LESSON 6-1

SUPPLIES ADJUSTMENT ON A WORK SHEET page 158 2 3 1 If supplies on August 1st has a balance of $1,025 and a balance o n August 31st of $310, what is the amount of supplies used (adjusted) during this fiscal period? 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment. LESSON 6-2

PREPAID INSURANCE ADJUSTMENT ON A WORK SHEET page 159 2 3 1 If Prepaid Insurance on August 1st has a balance of $1,200 and a balance on August 31st of $1100, what is the amount of insurance used (adjusted) during this fiscal period? 1. Write the debit amount. 2. Write the credit amount. 3. Label the two parts of this adjustment. LESSON 6-2

PROVING THE ADJUSTMENTS COLUMNS OF A WORK SHEET page 160 1 2 3 1. Rule a single line. 2. Add both the Adjustments Debit and Credit columns. Write each column’s total. 3. Rule double lines. LESSON 6-2

LESSON 6-2

1 LESSON 6-2

1 2 496400 10000 15000 11000 20000 5000 500000 62500 356500 21300 2800 30000 102500 120000 496400 10000 15000 31000 110000 20000 5000 500000 62500 6 (a) 71500 3 (b) 10000 4 11000 21300 2800 30000 356500 10000 71500 7 5 881500 881500 81500 81500 146600 356500 734900 525000 Net Income 8 209900 209900 9 356500 356500 734900 734900 LESSON 6-2

LESSON 6-1