0 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 18, Section 3 Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What Do You Think? How do adjustments affect net income?

1 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Main Idea Adjustments affect the amount of net income (or net loss). You Will Learn  how to complete the ten-column work sheet.  how to journalize and post the adjusting entries. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

2 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Key Term  adjusting entries Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

3 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Extending Work Sheet Balances The amounts for each account must be extended to or carried over to the Adjusted Trial Balance, the Income Statement, and the Balance Sheet sections. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

4 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Completing the Adjusted Trial Balance Section The balance of each Trial Balance account is combined with the adjustments in the Adjustments section. The new balance is entered in the appropriate Adjusted Trial Balance column. If there is no adjustment, the balance is transferred to the same column in the Adjusted Trial Balance section. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

5 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. SECTION 18.3 Completing the Adjusted Trial Balance Section

6 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Extending Amounts to the Balance Sheet and Income Statement Sections Each account in the Adjusted Trial Balance section is extended to one of the following sections:  the Income Statement section, containing temporary account balances  the Balance Sheet section, containing permanent account balances Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

7 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Completing the Work Sheet A single rule is drawn across the four columns in the Balance Sheet and Income Statement sections. The columns are totaled. Net income or net loss is recorded on the work sheet. The sections are proven if the two Income Statement sections are equal and the two Balance Sheet sections are equal. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

8 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

9 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Journalizing and Posting Adjusting Entries Adjusting entries update the general ledger accounts at the end of a period. These entries come from the Adjustments section of the work sheet. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

10 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Journalizing Adjustments The following entries are recorded in the Adjustments columns:  adjusting merchandise inventory  adjusting supplies  adjusting insurance  adjusting income tax The debit part of the entry is recorded first. The date for adjusting entries is the last day of the period. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

11 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Posting Adjusting Entries to the General Ledger Adjusting entries are recorded in the general journal and then posted to the general ledger accounts. This will cause the general ledger account balances to agree with the Income Statement and Balance Sheet sections. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3

12 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. SECTION 18.3 Posting Adjusting Entries to the General Ledger

13 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. SECTION 18.3 Posting Adjusting Entries to the General Ledger

14 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. SECTION 18.3 Posting Adjusting Entries to the General Ledger

15 Glencoe Accounting Unit 4 Chapter 18 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Key Term Review  adjusting entries Journal entries that update the general ledger accounts at the end of a period. Completing the Work Sheet and Journalizing and Posting the Adjusting Entries SECTION 18.3