Work Sheets & Adjusting Entries

Lesson 6-1 The Trial Balance columns of your work sheet prove the accuracy of the posting you did in your general ledger. Every account is listed in the order they are found in the general ledger. Accounts without a balance are listed too. (They will be needed for the adjustments.) Total debits = total credits

Lesson Credit 1 1 Debit Adjustment December 31 Adjustment Information: Supply Inventory: (After a manual count of all the supplies, is the value all that is left of your supplies at the end of the month.) How many supplies did you use up (your supply expense)? Subtract from , which is the current book balance of supplies. (Remember: You will always have to calculate the adjustment amount after you know the inventory amount.)

Lesson Debit Adjustment 2 2 Credit Adjustment amount Dec. 31 Adjustment Information: Current Value of Insurance: (The value of your policy at the end of the month, now that another month was used up.) How much is your insurance expense? Subtract from , which is the current recorded balance of your prepaid insurance policy. NOTE: (You will always have to calculate the adjustment amount.)

Lesson Totals 3 3 Double Rule 1 1 Single Rule

Lesson 6-3 Debit Balances without Adjustments Debit Balances with Adjustments 3 3 Credit Balances without Adjustments Remember to extend the Drawing account too. 4 4 You are moving the balances from the Trial Balance Columns to the Balance Sheet columns. These are the accounts that will be included on the Balance Sheet Report in the next step of the accounting cycle.

Now you are moving (sorting) the income statement accounts from the trial balance columns to the income statement columns. These are the accounts that will be included on the Income Statement Report in the next step of the accounting cycle. Now you are moving (sorting) the income statement accounts from the trial balance columns to the income statement columns. These are the accounts that will be included on the Income Statement Report in the next step of the accounting cycle. Lesson 6-3 Sales Balance 1 1 Expense Balances with Adjustments Expense Balances without Adjustments You are only moving income statement account balances.

Lesson Double Rule 3 3 Extend Net Income 2 2 Calculate Net Income 1 1 Totals 4 4 To calculate the net income amount, subtract the total expenses from sales. ( minus ) To calculate the net income amount, subtract the total expenses from sales. ( minus ) Now that all account balances have been moved over, you can finally determine if you made money or lost money.

Lesson Extend Net Loss 3 3 Net Loss 2 2 Totals Single Rule 1 1 To calculate the net loss amount, subtract the sales (income statement credit column) from the total expenses (income statement debit column). Note: You have a net loss when total expenses are greater than sales. To calculate the net loss amount, subtract the sales (income statement credit column) from the total expenses (income statement debit column). Note: You have a net loss when total expenses are greater than sales. ExpensesSales

Lesson 6-4 Supplies Expense Supplies Jan. 31 Bal Adj. (a) (New Bal.90.00) Adj. (a) Info comes from your worksheet. When the work sheet is completed, you have to record the adjustments in the journal. This entry—after posting—will bring the accounts in the general ledger up to date so they match what you have on the work sheet.

Jan. 31 Bal Lesson 6-4 Insurance Expense Prepaid Insurance Debit Adj. (b) (New Bal ) Adj. (b) After posting the adjusting entries in the general ledger, the balance of Prepaid Insurance will be $750.00, which is what the policy is worth at the end of the month.

Lesson 6-4 After posting the adjusting entries you recorded in the journal to these four general ledger accounts, the account balances are now up to date and reflect how these accounts changed due what was used up during the month. Now the general ledger cards also show how much your insurance and supplies expenses are for the month. After posting the adjusting entries you recorded in the journal to these four general ledger accounts, the account balances are now up to date and reflect how these accounts changed due what was used up during the month. Now the general ledger cards also show how much your insurance and supplies expenses are for the month.

Accounting