2. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ADJUSTING ENTRIES AND THE WORK SHEET Chapter 4

3. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

4. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A fiscal period is any ________________ covering a ___________ accounting cycle. A fiscal year is a fiscal period consisting of ________ consecutive months. A fiscal year __________ have to coincide with the calendar year. For ________________ purposes, any period of twelve __________ months may be selected. However, you __________________ from year to year. Fiscal Period

5. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The accounting cycle represents the __________ ____________________________ completed during the fiscal period. The Accounting Cycle

6. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. You are Here

7. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The work sheet is a tool (working paper) used by accountants to record __________________ and provide _______________________ needed to help in preparing financial statements. The heading consists of three lines: 1.________________________ 2.________________________ 3.________________________ The Work Sheet

8. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 1

9. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

10. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Trial Balance Columns Assuming _____________________, the account classifications are listed in the Trial Balance Debit and Credit columns of the work sheet: The Columns of the Work Sheet

11. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Adjusted Trial Balance Columns The adjusted trial balance columns are merely _________ of the ______________________, plus or minus any adjustment amounts. The Columns of the Work Sheet

12. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Income Statement Columns An income statement contains the ______________ _______ the ________________. Revenue accounts have _______ balances, so they are recorded in the Income Statement ______ column. Expense accounts have _________ balances, so they are recorded in the Income Statement _________ column. The Columns of the Work Sheet

13. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Income Statement Columns The Columns of the Work Sheet

14. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Balance Sheet Columns Asset accounts have ________ balances, so they are recorded in the Balance Sheet ________ column. Liability accounts have ________ balances, so they are recorded in the Balance Sheet ________ column. The ________ account has a ________ balance, so it is recorded in the Balance Sheet ________ column. ________ is a ________ from Capital, thus it has a ________ balance and is recorded in the Balance Sheet ________ column. The Columns of the Work Sheet

15. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Balance Sheet Columns The Columns of the Work Sheet

16. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 2

17. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective

18. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ________ are a way of updating the ledger accounts. Adjustments may be considered ________ ________. They are determined ________ the trial balance has been prepared. Adjustments are first recorded on the _____ ______ sheet when using a _______ ________ ________. Adjustments

19. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Without adjustments the financial statements would be out of focus.

20. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplies The amount of supplies used during the period is deducted from the _________ account and added to _______________. Count ________ __ ____ and determine the value ($215) The difference is the amount used during the period, or supplies expense ($___– ___= $460)

21. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Prepaid Insurance The $1,875 balance in ___________________ represents the premium paid in advance for a three-month liability insurance policy. Cost of insurance that remains _________ ___ _____________. 1,875 per year ÷ _ months = $625 per month

22. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Durable items, such as appliances and fixtures, are recorded as _______________ because they will last longer than ______ year. The cost of these assets should be systematically spread out over their _________________. This process is called _________________. Depreciation of Equipment

23. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Equipment account has a balance of $51,300. Conner estimates that the equipment will have a useful life of seven years, with a trade-in (salvage) value of $8,292 at the end of that time. Depreciation of Equipment

24. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Depreciation of Equipment Accumulated Depreciation, Equipment, is _________ to, or a _________ from, Equipment, so we call it a __________________.

25. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. On the balance sheet, the balance of _____________ ________________ is deducted from the balance of the related asset account. Depreciation of Equipment

26. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Why is this adjustment necessary? ________________________________ What are accrued wages? ____________________________________________ ____________________________________________ ____________________________________________ What accounts are used? ____________ Wages Expense

27. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Wages Expense

28. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Brown Company pays its employees a total of $400 per day and that payday falls on Friday. Assume the last day of the fiscal period ends on Wednesday, December 31. Wages Expense

29. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Wages Expense An _________ for the 3 days (December 29-31) in the fiscal year. Increase in _________ account. ______________ until January 2 (Next Payday). _________ in liability account.

30. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The amount of wages for the month of June for Conner Whitewater Adventures is $2,360 (or $78.67 per day based on 30 days). The last payday was June 24. Wages Expense Accruing wages is recognizing an _________ (the 6 days they will have to pay) that has been _________ but has not yet been _________ (payday has not yet arrived). _____ x _ days = $472

31. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Each adjusting entry contains an _______________ _______________ (______or ______) and a _______________ _______________ (______, ______ or ______). Accountants refer to these accounts as _______ ________ which are accounts with balances that are partly ______ ______ and partly ______ ______ amounts. Mixed Accounts

32. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Placement of Accounts on the Work Sheet: Capital and Drawing Account Balances ______ is deducted from ______. Capital account normal balance is a ______ balance. ______ is a ______ ______. Drawing account normal balance is a ______ balance.

33. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Placement of Accounts on the Work Sheet: Capital and Drawing Account Balances Equipment is an ______. Equipment account normal balance is a ______ balance. Accumulated Depreciation, Equipment is ______ from Equipment. Accumulated Depreciation, Equipment account normal balance is a ______ balance.

34. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Placement of Accounts on the Work Sheet: Capital and Drawing Account Balances Net Income (or loss) is the difference between ______ and ______. Net Income is ______ to the ______ account (______ ) Net Loss is ______ from the ______ account (______ )

35. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Steps in Completion of the Work Sheet

36. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

39. Finding Errors in the Income Statement and Balance Sheet Columns

40. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 3

41. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

42. Learning Objective

43. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The work sheet is not a journal, so we must ____________ ____________ ____________ to update the ledger accounts. Take the information for these entries directly from the ____________ ____________ of the work sheet. _______ and _______ exactly the same accounts and amounts from the work sheet to the journal. Many adjustments are made to follow the ____________ ____________. In other words, revenues _______ in one period are _______ with the _______ associated with that _______. Journalizing Adjusting Entries

44. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

46. Practice Exercise 4

47. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

51. Learning Objective

52. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Since we have completed the work sheet for Conner’s Whitewater Adventures, we can now prepare the income statement, the statement of owner’s equity, and the balance sheet by taking the figures directly from the work sheet. Completion of the Financial Statements

53. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. to _______________ _________________ _________________

54. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. from _________ ____________ to the __________ _____________

55. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. from _______________ _________________ _________________

56. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 5

57. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

60. Learning Objective

61. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. When an organization has ___________________ distinct source of revenue, a ___________________ account is set up for __________ source. Harris Miniature Golf’s income statement is an example of a company has more than _________ revenue account. Income Statement Involving More than One Revenue Account and a Net Loss

62. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Note that expenses are greater than revenues, resulting in a ___________.

63. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Practice Exercise 6a

64. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

65. Learning Objective

66. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

68. Practice Exercise 6b

69. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

70. Learning Objective

71. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

73. Practice Exercise 6c 2-73

74. © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.