1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-1 Creating a Worksheet Four reasons Accountants use Worksheets; 1.To summarize general ledger account balances to prove that debits equal credits. 2.To plan needed changes to general ledger accounts to bring account balance up to date 3.To separate general ledger account balances according to the financial statements to be prepared. 4.To calculate the amount of net income or net loss for a fiscal period.

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 Chapter Concepts: Consistent Reporting: applied when the same accounting procedures are followed in the same way in each accounting period. Accounting Period Cycle: Applied when changes in financial information are reported for a specific period of time in the form of financial statements. Matching Expenses with Revenue: Applied when revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period. Chapter Concepts

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 6-1 PREPARING THE HEADING OF A WORK SHEET page 153 Name of Company 1 Name of Report 2 Date of Report 3

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 6-1 1.Write the general ledger account titles. 2.Write the general ledger debit account balances. Write the general ledger credit account balances. 4.Add both the Trial Balance Debit and Credit columns. 3.Rule a single line across the two Trial Balance columns. 5.Write each column’s total below the single line. 6.Rule double lines across both Trial Balance columns. PREPARING A TRIAL BALANCE ON A WORK SHEET page 154 1 2 4 3 5 6

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-2 Planning Adjusting Entries on a Work Sheet In two accounts, supplies and prepaid insurance, we have used some of what we owned. During each month we used some of our supplies to run the business and we used a portion of our prepaid insurance. These are considered expenses for the business and we must account for the portion we used during the month we used it.

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 6-2 SUPPLIES ADJUSTMENT ON A WORK SHEET 1 2 page 158 3 1.Write the debit amount. 2.Write the credit amount. 3.Label the two parts of this adjustment.

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 6-2 PREPAID INSURANCE ADJUSTMENT ON A WORK SHEET page 159 1 2 3 1.Write the debit amount. 2.Write the credit amount. 3.Label the two parts of this adjustment.

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 6-2 PROVING THE ADJUSTMENTS COLUMNS OF A WORK SHEET page 160 3.Rule double lines. 2.Add both the Adjustments Debit and Credit columns. Write each column’s total. 1.Rule a single line. 1 3 2

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 6-2 PREPARING A WORK SHEET page 160 C 1.Write the heading. 2.Record the trial balance. 3.Record the supplies adjustment. 4.Record the prepaid insurance adjustment. 5.Prove the Adjustments columns. 6.Extend all balance sheet account balances. 7.Extend all income statement account balances. 8.Calculate and record the net income (or net loss). 9.Total and rule the Income Statement and Balance Sheet columns.

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 6-2 (b) 10000 4 (a) 71500 3 496400 10000 15000 11000 10000 102500 120000 20000 5000 500000 62500 356500 21300 2800 30000 881500 81500 146600356500734900525000 356500734900 496400 10000 15000 10000 31000 110000 20000 5000 500000 62500 6 11000 21300 2800 30000 356500 10000 71500 7 209900 Net Income 8 9 1 2 5 356500734900

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-3 Extending Financial Statement Information on a Work Sheet

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 6-3 EXTENDING BALANCE SHEET ACCOUNT BALANCES ON A WORK SHEET page 162 1.Debit balances without adjustments 2.Debit balances with adjustments 3.Credit balances without adjustments 3 2 1

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 6-3 EXTENDING INCOME STATEMENT ACCOUNT BALANCES ON A WORK SHEET page 163 1.Sales balance 2.Expense balances without adjustments 3.Expense balances with adjustments 1 3 2

14. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 6-3 1.Single rule 2.Totals 3.Net income RECORDING NET INCOME, AND TOTALING AND RULING A WORK SHEET 4.Extend net income6.Totals 6 7 3 5 2 1 4 5.Single rule7.Double rule page 164

15. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 6-3 CALCULATING AND RECORDING A NET LOSS ON A WORK SHEET page 165 2.Totals 3.Net loss 4.Extend net loss 1.Single rule 2 1 3 4

16. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-4 Finding and Correcting Errors on the Work Sheet

17. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 6-4 CORRECTING AN ERROR IN POSTING TO THE WRONG ACCOUNT page 168 1.Draw a line through the entire incorrect entry. Recalculate the account balance and correct the work sheet. 2 Correct entry 1 Incorrect entry 2.Record the posting in the correct account. Recalculate the account balance, and correct the work sheet.

18. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 6-4 CORRECTING AN INCORRECT AMOUNT 1 2 3 page 169 1.Draw a line through the incorrect amount. 2.Write the correct amount just above the correction in the same space. 3.Recalculate the account balance, and correct the account balance on the work sheet.

19. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 6-4 1 2 3 CORRECTING AN AMOUNT POSTED TO THE WRONG COLUMN 546 page 169 6.Recalculate the account balance, and correct the work sheet. 5.Record the posting in the correct amount column. 4.Draw a line through the incorrect item in the account.

20. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 6-3 TERMS REVIEW page 166 Adjustments Changes recorded on a work sheet to update general ledger accounts at the end of the fiscal period. Balance sheet A financial statement that reports assets, liabilities and owner’s equity on a specific date. Fiscal period The length of time for which a business summarizes and reports financial information. Income statementA financial statement showing the revenue and expenses for a fiscal period. Net income The difference between total revenue and total expenses when total revenue is greater. Net loss The difference between total revenue and total expenses when total expenses are greater. Trial balanceA proof of the equality of debits and credits in a general ledger. WorksheetA columnar accounting form used to summarize the general ledger information needed to prepare financial statements.