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6-1 CREATING A WORK SHEET6-1 CREATING A WORK SHEET
Fiscal Period: The length of time for which a business summarizes and reports financial information.
1 Month, 6 Months, 1 YearBusiness can choose length which suit their needs. Period can be any date, though most businesses begin on the first day of the month.
Work Sheet: A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
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PREPARING THE HEADING OF A WORK SHEETPREPARING THE HEADING OF A WORK SHEETpage 153
Name of CompanyName of Company
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Name of ReportName of Report
22
Date of ReportDate of Report
33
Trial Balance: A proof of the equality of debits and credits in the general ledger. -Account titles listed in the same order as chart of accounts.-All accounts are listed even if they do not have a balance.
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1. Write the general ledger account titles.
2. Write the general ledger debit account balances. Write the general ledger credit account balances.
4. Add both the Trial Balance Debit and Credit columns.
3. Rule a single line across the two Trial Balance columns.
5. Write each column’s total below the single line.
6. Rule double lines across both Trial Balance columns.
PREPARING A TRIAL BALANCE ON A WORK SHEETPREPARING A TRIAL BALANCE ON A WORK SHEETpage 154
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22
44
33
55 66
6-2 PLANNING ADJUSTING ENTRIES 6-2 PLANNING ADJUSTING ENTRIES ON A WORK SHEETON A WORK SHEET
Adjustments: Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period.-Assets like supplies and prepaid insurance are used to earn revenue.-What we have actually used to earn revenue become expenses.-We use the work sheet to plan adjustments
4 Questions we ask when analyzing adjustments:1. What is the balance?2. What should the balance be?3. What must be done to correct the account balance?4. What adjustment is made?
Look at pages 158-159
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SUPPLIES ADJUSTMENT ON A WORK SHEETSUPPLIES ADJUSTMENT ON A WORK SHEET
11
22
page 158
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1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
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PREPAID INSURANCE ADJUSTMENT PREPAID INSURANCE ADJUSTMENT ON A WORK SHEETON A WORK SHEET page 159
11
2233
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
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PROVING THE ADJUSTMENTS PROVING THE ADJUSTMENTS COLUMNS OF A WORK SHEETCOLUMNS OF A WORK SHEET page 160
3. Rule double lines.
2. Add both the Adjustments Debit and Credit columns. Write each column’s total.
1. Rule a single line.
11
33
22
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PREPARING A WORK SHEETPREPARING A WORK SHEETpage 160 C
1. Write the heading.
2. Record the trial balance.
3. Record the supplies adjustment.
4. Record the prepaid insurance adjustment.
5. Prove the Adjustments columns.
6. Extend all balance sheet account balances.
7. Extend all income statement account balances.
8. Calculate and record the net income (or net loss).
9. Total and rule the Income Statement and Balance Sheet columns.
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(b) 10000
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(b) 10000
(a) 71500
(a) 71500
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4964001000015000
11000
10000102500120000
200005000
50000062500
35650021300
280030000
881500 881500 81500 81500 146600 356500 734900 525000
356500 734900
49640010000150001000031000
11000020000
5000500000
62500
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11000
21300
280030000
356500
10000
71500
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209900 209900Net Income 8899
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22
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356500 734900
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6-3 EXTENDING BALANCE SHEET ACCOUNT 6-3 EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEETBALANCES ON A WORK SHEET page 162
1. Debit balances without adjustments
2. Debit balances with adjustments 3. Credit balances without adjustments33
22
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At the end of each fiscal period, TechKnow prepares two financial statements from information on the worksheet.Balance Sheet: Reports assets, liabilities, and owner’s equity on a SPECIFIC Date.
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EXTENDING INCOME STATEMENT ACCOUNT EXTENDING INCOME STATEMENT ACCOUNT BALANCES ON A WORK SHEETBALANCES ON A WORK SHEET
page 163
1. Sales balance2. Expense balances without adjustments3. Expense balances with adjustments
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33
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Income Statement: A financial statement showing revenue and expenses for fiscal period called an income statement.
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1. Single rule
2. Totals
3. Net income
RECORDING NET INCOME, AND TOTALING RECORDING NET INCOME, AND TOTALING AND RULING A WORK SHEETAND RULING A WORK SHEET
4. Extend net income 6. Totals
66 773355
221144
5. Single rule 7. Double rule
page 164
Revenue > Expenses = Net Income