Review from Yesterday Work Sheet is an informal business paper used to organize and plan the information for the financial Introduced to 6 column work sheet (next chapter we will move onto 8 column work sheet which includes adjustments) Work sheet includes Trial Balance (ALL accounts are listed), Income Statement (Revenue & Expenses, calculates net income or net loss), and Balance sheet (includes assets, liabilities, owner’s equity (drawings & capital) Total all 4 columns in Income Statement and Balance Sheet

Review Cont. Difference in totals should equal in the income statement & balance sheet When there is a profit the balancing figure is placed in the 2 outside columns Income StatementBalance Sheet DebitCreditDebitCredit Total of each column Net Income ______ Total$ $ Balancing Figure

When there is a loss, the balancing figure is placed in the 2 inside columns Income StatementBalance Sheet DebitCreditDebitCredit Total of each column Net Loss______ ______ Total$ $

Vulcan Rentalls Income Statement Year Ended December 31, 2011 Create an Income Statement on the sheet provided for Vulcan Rentalls using the work sheet from yesterdays class Income Statement requires: Revenue & Expenses Net Income = Revenue > Expenses Net Loss = Revenue < Expenses

Vulcan Rentalls Income Statement Year Ended December 31, 2011 Revenue Sales $ Expenses Advertising Expense $ Bank Charges Expense Car Expense Miscellaneous Expense Rent Expense Telephone Expense Utilities Expense Wages Expense Total Expenses Net Income $

Classified Balance Sheet Has the data grouped according to major categories We have already been introduced to the report form of the balance sheet. It is when the information is presented in a one-above- the-other, or vertical, format.

Major Categories Assets: Current assets- unrestricted cash, an asset that will be converted into cash within one year, or an asset that will be used up within one year Examples: Bank, Accounts Receivable Fixed assets- a long-term asset held for its usefulness in producing goods or services. Same as Plant and Equipment

Liabilities Current liability- a short-term debt, payment of which is expected to occur within one year Examples: Bank Loan, Accounts Payable Long-term liability- a liability which, in the ordinary course of business, will not be paid within one year Example: Mortgage Payment

Assets Current Assets Bank $ 1,750 Accounts Receivable 35,879 Supplies 1,350 $ 38,979 Fixed Assets Building $ 55,000 Equipment 15,070 Automobile 33,350 Land (least liquid) 40, ,420 Total Assets $ 182,399 Liabilites and Owner's Equity Current Liabilities Bank Loan $ 25,000 Accounts Payable 9,088 HST Payable (add PST payable) $ 1,393 Less HST Recoverable 279 1,114 Mortage Instalment (current) 850 $ 36,052 Long-Term Liability Mortgage Payment 80,000 Total Liabilities $ 116,052 J. Otto, Capital Balance January 1 $ 50,287 Net Income $ 38,560 Drawings 22,500 Increase in Equity 16,060 Balance December 31 66,347 Total Liabilites and Owner's Equity $ 182,399 Peoples’ Security Company Classified Balance Sheet December 31, 2011 Heading Assets < 1 year (very liquid) Assets > 1 year Debts to be paid within 1 year (short term) Debts > 1 year Net Income > Drawings

Vulcan Rentalls Classified Balance Sheet December 31, 2011 Assets Current Assets Bank $ 3, Accounts Receivable 19, Supplies 1, Total Current Assets $ 24, Fixed Assets Equipment 20, Automobiles 32, Total fixed assets 53, Total Assets $ 77, Liabilites and Owner's Equity Current Liabilities Bank Loan $ 10, Accounts Payable 5, HST Payable $ 1, Less: HST Recoverable Remittance Total Liabilities $ 16, R. Tessier, Capital Beginning Capital $ 49, Net Income $ 35, R. Tessier, Drawings 24, Increase in Capital 11, Ending Capital 61, Total Liabilities and Owner's Equity $ 77,436.22

For tomorrow: Complete Exercise #1, 2 p. 276 (t), p (w) Start exercise #2 ‘Ying Lo’ p. 292 (t) p (w) * Check posted answers on board