1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 22-1 Preparing a Work Sheet for a Corporation

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 22-1 INTEREST INCOME ADJUSTMENT 1.Debit Interest Receivable. 1 2 page 638 2.Credit Interest Income.

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 22-1 1.Credit Supplies. SUPPLIES ADJUSTMENT 1 2 page 638 2. Debit Supplies Expense.

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 22-1 1.Debit Federal Income Tax Expense. FEDERAL INCOME TAX ADJUSTMENT 2 1 page 639 2.Credit Federal Income Tax Payable.

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 22-1 COMPLETING A WORK SHEET page 641 4 2 1 3 5 1.Total the Income Statement and Balance Sheet columns. 2.Calculate and enter the net income after federal income tax. 3.Extend the net income after federal income tax amount. 4.Calculate the column totals. 5.Rule double lines.

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 22-2 Preparing an Income Statement

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 22-1 INCOME STATEMENT page 645

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 22-1 INCOME STATEMENT page 645

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 22-1 INCOME STATEMENT page 645

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 22-1 ANALYZING AN INCOME STATEMENT page 647 Cost of Merchandise Sold Component Percentage =Net Sales÷ Cost of Merchandise Sold 57.3%=$2,078,876.70÷$1,190,794.80

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 22-3 Preparing a Statement of Stockholders’ Equity and Balance Sheet

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 22-1 STATEMENT OF STOCKHOLDERS’ EQUITY 1 2 3 page 649 2.Prepare the capital stock section. 1.Write the heading. 3.Prepare the retained earnings section.

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 22-1 BALANCE SHEET page 650

14. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 22-1 BALANCE SHEET page 650

15. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 22-1 ANALYZING A BALANCE SHEET page 652 Working Capital = Total Current Liabilities – Total Current Assets $172,100.02=$57,494.53–$229,594.55 Current Ratio = Total Current Liabilities ÷ Total Current Assets 4.0 to 1=$57,494.53÷$229,594.55 Working Capital Current Ratio

16. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 22-1 TERMS REVIEW long-term liabilities working capital current ratio page 653

17. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 22-4 Adjusting, Closing, and Reversing Entries for a Corporation

18. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 22-1 ADJUSTING ENTRIES page 654

19. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 22-1 CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES 1 2 page 655 1.Enter the balance of accounts in the Income Statement credit column as a debit. 2.Enter the total of the debit entries as a credit to Income Summary.

20. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 22-1 CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES 1 2 3 page 656 3.Enter the total of the credit entries as a debit to Income Summary. 2.Enter the balance of every account in the Income Statement debit column as a credit. 1.Enter the account title Income Summary.

21. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON 22-1 CLOSING ENTRY TO RECORD NET INCOME 1 2 page 657 2.Credit Retained Earnings. 1.Debit Income Summary.

22. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 22-1 CLOSING ENTRY FOR DIVIDENDS 1 2 page 657 2.Credit Dividends. 1.Debit Retained Earnings.

23. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 23 LESSON 22-1 REVERSING ENTRIES 2 3 page 658 1 3.Reverse the entry that created a balance in Federal Income Tax Payable. 2.Reverse the entry that created a balance in Interest Payable. 1.Reverse the entry that created a balance in Interest Receivable.

24. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 24 LESSON 22-1 (continued on next slide) ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION 1 2 3 4 page 659 1.Source documents are checked for accuracy, and transactions are analyzed into debit and credit parts. 2.Transactions, from information on source documents, are recorded in journals. 3.Journal entries are posted to the accounts payable, accounts receivable, and general ledgers. 4.Schedules of accounts payable and accounts receivable are prepared from the subsidiary ledgers.

25. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 25 LESSON 22-1 9.Reversing entries are journalized and posted to the general ledger. ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATION 9 8 7 5 6 page 659 5.A work sheet, including a trial balance and an adjustment for federal income tax expense, is prepared from the general ledger. 6.Financial statements are prepared from the work sheet. 7.Adjusting and closing entries are journalized from the work sheet and posted to the general ledger. 8.A post-closing trial balance of the general ledger is prepared. (continued from previous slide)