1. The Worksheet
(& Adjusting Entries)

2. Homework check…
Page 308
Exercise 1
Exercise 3
Exercise 5

3. Adjusting Entries Supplies 500 Bank 500
End of fiscal period adjusting entry:
Supplies Expense
Supplies 150

4. Prepaid Rent $1200
Bank $1200
(4 months later)
Rent Expense $100
Prepaid Rent $100

5. Adjustment 3: Late Invoice
What if we bought some Christmas trees for our office on December 24th?
We picked up the trees and signed an invoice for them.

6. The invoice might not arrive until January 3rd or 4th.
We still need to record that invoice in the fiscal period in which we had the expense.

7. Transaction:
Jan 3. Received a purchase invoice from Christmas Inc., for $2100 related to the previous fiscal period.
Dec Miscellaneous Expense
A/P-Christmas Inc

8. The Worksheet
The worksheet is an extended ‘trial balance’ making it easy for you to see all of the numbers on your potential financial documents.
Take a look at your handout:

9. Let’s set up your work sheet using the following ledger…. (*use pencil!)
Bank DR 30,000
Supplies DR 3,000
Bank Loan CR 4,000
S. Guy, Capital CR 12,200
S. Guy, Drawings DR 1,000
Fees Earned CR 18,000
Supplies Expense DR

11. Total the DR and CR columns (of the Trial Balance)
Double underline them!

12. Adjusting Entries
Adjusting entries are done after the trial balance is taken off.
There is a column on the worksheet to account for this.

13. Example adjustment
At the end of the year, the physical count of supplies shows $1500 remaining.
The adjusting entry would be?

14. Supplies Expense
Supplies
You will also do this transaction on your worksheet in the ‘adjustment column.’

16. Financial Statements
Extend the income and expenses to the ‘income statement’ column.
* take into account your ‘adjustments!’
Extend the other items to the ‘balance sheet’ column. (Inlcuding ‘Drawings’)

17. Total these columns. (But don’t double underline them!)

18. The next step is VERY important!
ENSURE THE DIFFERENCES BETWEEN THE TWO B/S COLUMNS AND I/S COLUMNS ARE THE SAME!!

19. Add the difference; Double underline the totals.

20. These two numbers need to be the same.
If they are, you have all the information you need to prepare your financial statements!

21. Homework
Using an eight-column worksheet, do Exercise 1 (A, B) on page 320.
(This will be due tomorrow – the supply teacher will record whether it is done or not done (no ‘in-between’.))