Record the end of period General Ledger account balances in the Trial Balance columns of the worksheet. ◦ See General Ledger & Worksheet solutions
Used to adjust account balances at the end of the fiscal period. ◦ For purposes of the Mini-case this is one month Brainstorm examples of situations that require accounts to be adjusted through an adjustment entry. First entered into the Journal. ◦ Identify these by inserting “Adjusting Entries” as a section title before the journalizing the adjusting entries. After entering the adjusting entries in the Journal, they must be posted to the General Ledger and placed into the “Adjustments” column of the worksheet.
The sample case has one adjusting entry. ◦ In the Multicolumn Journal write “Adjusting Entries” as a heading in the Item Column. ◦ The rows that follow are used to record any necessary adjusting entries. ◦ An inventory of supplies reveals $150 of supplies used during the month. Debit Supplies Expense ($150) & credit Supplies ($150)
Post the two adjusting entries to the General Ledger. ◦ Remember to put the Ledger account numbers in the PR (post reference) column. After posting - record the adjusting entries in the Adjustment columns of the eight-column worksheet.
Use the adjusting entry values to update the account balances for each adjusted account. Place the adjusted account balances, as well as all others, in the Balance Sheet or the Income Statement Columns within the worksheet.
After the adjusted Trial Balance account totals are extended to the worksheet’s Balance Sheet and Income Statement Columns, it is time to determine whether the business made a profit or suffered a loss during the financial period. Total the Revenue & Expense worksheet columns.
Subtract total expenses from total revenue (Revenue minus Expenses = Net Income (profit) or Net Loss. ◦ Enter this value into the worksheet below TOTALS to balance the Income Statement and Balance Sheet Columns. ◦ This entry will be either a debit (Net Income) or credit (Net Loss) in the Income Statement columns; and either a debit (Net Loss) or credit (Net Income) in the Balance Sheet columns. The amount of the Net Income or Net Loss is important for preparing financial statements and closing entries (see next slide show for more about closing entries).