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Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn How to complete the Adjusted Trial Balance section. How to extend amounts to the Income Statement and Balance sheet sections. How to report the net income or net loss for the period. How to journalize the adjusting entries in the general journal. How to post the adjusting entries to the general ledger. What You’ll Learn How to complete the Adjusted Trial Balance section. How to extend amounts to the Income Statement and Balance sheet sections. How to report the net income or net loss for the period. How to journalize the adjusting entries in the general journal. How to post the adjusting entries to the general ledger.
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Why It’s Important The work sheet is the source of information for journalizing the adjusting entries and preparing the financial statements. Why It’s Important The work sheet is the source of information for journalizing the adjusting entries and preparing the financial statements. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Completing the Adjusted Trial Balance Section Once the adjustments are entered in the Adjustments section of the work sheet, it is important to prove that the accounts are still in balance. This is done by completing an adjusted trial balance. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Extending Amounts to the Balance Sheet and Income Statement Sections Beginning with line 1, each account balance in the Adjusted Trial Balance section is extended to the appropriate column of either the Balance Sheet section or the Income Statement section. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Completing the Work Sheet After all amounts are extended to the Balance Sheet and Income Statement sections, a single rule is drawn across the columns in these sections. All four columns are then totaled. The difference between the two column totals in each section is the amount of net income (or net loss) for the period. After all amounts are extended to the Balance Sheet and Income Statement sections, a single rule is drawn across the columns in these sections. All four columns are then totaled. The difference between the two column totals in each section is the amount of net income (or net loss) for the period. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Completing the Work Sheet (cont'd.) After the net income (or net loss) is recorded, the columns in the Balance Sheet and Income Statement sections are ruled and totaled. A double rule is drawn across all four columns. After the net income (or net loss) is recorded, the columns in the Balance Sheet and Income Statement sections are ruled and totaled. A double rule is drawn across all four columns. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Journalizing Adjustments The journal entries that update the general ledger accounts at the end of a period are called adjusting entries. The source of information for journalizing the adjusting entries is the Adjustments section of the work sheet. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Journalizing Adjustments (cont'd.) Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Posting Adjusting Entries to the General Ledger After the adjusting entries are recorded in the general journal, they are posted to the general ledger accounts. Once the adjusting entries are posted, the general ledger accounts are up-to-date. After the adjusting entries are recorded in the general journal, they are posted to the general ledger accounts. Once the adjusting entries are posted, the general ledger accounts are up-to-date. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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Check Your Understanding Which types of general ledger accounts appear in the Balance Sheet section of the work sheet? Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)
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