1. There is no “Bob” narration on this series of slides (yea!)
(They are pretty self-explanatory.)

3. Worksheet
Multiple-column form used in preparing financial statements. (It is NOT a financial statement).
Not a permanent accounting record.
May be a computerized worksheet using an electronic spreadsheet program such as Excel.
Use of worksheet is optional.

4. Steps in Preparing a Worksheet

5. Steps in Preparing a Worksheet
1. Prepare a Trial Balance on the Worksheet
Trial balance amounts come directly from ledger accounts.
Include all accounts with balances.

6. Adjusting Journal Entries
Steps in Preparing a Worksheet
Adjusting Journal Entries
(Chapter 3)

7. Steps in Preparing a Worksheet
2. Enter the Adjustments in the Adjustments Column
(a)
(b)
Adjustments Key:
(a) Supplies Used.
(b) Insurance Expired.
(c) Depreciation Expensed.
(d) Service Revenue Recognized.
(e) Service Revenue Accrued.
(f) Interest Accrued.
(g) Salaries Accrued.
(d)
(d)
(e)
(g)
(a)
(b)
(c)
(c)
(e)
Enter adjustment amounts, total adjustments columns,
and check for equality.
(f)
(f)
(g)
Add additional accounts as needed.

8. Total the adjusted trial balance columns and check for equality.
Steps in Preparing a Worksheet
3. Complete the Adjusted Trial Balance
(a)
(b)
(d)
(d)
(e)
(g)
(a)
(b)
(c)
(c)
(e)
(f)
(f)
(g)
Total the adjusted trial balance columns and check for equality.

9. Steps in Preparing a Worksheet
4. Extend Amounts to Financial Statement Columns
(a)
(b)
(d)
(d)
(e)
(g)
(a)
(b)
(c)
(c)
(e)
(f)
(f)
(g)
Extend adjusted trial balance amounts to appropriate financial statement columns.

10. Compute Net Income or Net Loss.
Steps in Preparing a Worksheet
5. Total Columns, Compute Net Income (Loss)
(a)
(b)
(d)
(d)
(e)
(g)
(a)
(b)
(c)
(c)
(e)
(f)
(f)
(g)
Compute Net Income or Net Loss.

11. The slides that follow are a “walk-thru” of completing a worksheet
The slides that follow are a “walk-thru” of completing a worksheet. Note that worksheets often are eight columns – eliminating the 2 “adjusted trial balance” columns.
Textbook
Real World

12. Completed Worksheet

16. These column subtotals will not balance (be equal) since REV (hopefully) are greater than EXP.
(You must “plug-in” the difference between the totals – which will be either a debit (Net Profit) or credit (Net Loss).

17. These column subtotals will not balance (be equal) due to a net income or net loss.
(You “plug-in” the difference between the totals – a credit (for a “Net Profit”) or a debit (for a Net Loss) … OPPOSITE of your “Income Statement column “plug-in”). Note that the amounts … 7,920 … are the same (if your calculations are is correct).

19. Using a Worksheet Once again:
Not a financial statement. (because it is for internal use only – not “published” (available) for those outside the company).
Use of a worksheet is optional.

20. Preparing Statements from a Worksheet
Income statement is prepared from the income statement columns.
Balance sheet and retained earnings statement are prepared from the balance sheet columns.
Companies can prepare financial statements before they journalize and post adjusting entries.

21. Preparing Statements from a Worksheet

22. Preparing Statements from a Worksheet

23. Illustration 4-3

24. Preparing Adjusting Entries from a Worksheet
Adjusting entries are prepared from the adjustments columns of the worksheet.
Journalizing and posting of adjusting entries follows the preparation of financial statements when a worksheet is used.