Download Lesson 6-1 - Huber Heights City Schools

LESSON 6-1
Creating a Worksheet
CENTURY 21 ACCOUNTING © Thomson/South-Western
2
FISCAL PERIOD
page 152
 The length of time for which a business summarizes
and reports financial information.
 Concept: Accounting Period Cycle
 Most use a one year cycle (due to tax reports)
 Many do monthly reports (to help make decisions)
 Fiscal period can begin on any date.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
3
WORK SHEET: Four reasons for use
page 153
 To summarize general ledger account balances to
prove that debits equal credits
 To plan needed changes to general ledger accounts
to bring account balances up to date
 To separate general ledger account balances
according to the financial statements to be prepared
 To calculate the amount of net income or net loss
 **Note: Worksheets are not permanent records like a
journal or ledger. They are only planning tools.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
4
PREPARING THE HEADING OF A
WORK SHEET
1
2
Name of Company
Name of Report
3
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 153
Date of Report
LESSON 6-1
5
PREPARING A TRIAL BALANCE ON A
WORK SHEET
2
1
3
5
page 154
1. Write the general ledger
account titles.
2. Write the general ledger
debit account balances.
Write the general ledger
credit account balances.
3. Rule a single line across the
two Trial Balance columns.
4
4. Add both the Trial Balance
Debit and Credit columns.
5. Write each column’s total
below the single line.
6. Rule double lines across
6 both Trial Balance columns.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
6
TERMS REVIEW
page 155
 fiscal period
 work sheet
 trial balance
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
LESSON 6-2
Planning Adjusting Entries
on a Work Sheet
CENTURY 21 ACCOUNTING © Thomson/South-Western
8
PLANNING ADJUSTING ENTRIES
page 157
 Concept: Matching Expenses with Revenue
 When revenue from business activities and expenses
associated with earning that revenue are recorded in the
same accounting period.
 It wouldn’t be practical to make entries every time
you use a supply like a pencil or to record insurance
as it expires each day.
 Adjustments: changes recorded on the work sheet to
update general ledger accounts at end of fiscal
period.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
9
PLANNING SUPPLIES ADJUSTING ENTRYpage 158
Four questions in analyzing the adjustment:
 What is the balance of Supplies?
 $1025.00
 What should the balance be for this account?
 $310.00
 What must be done to correct the account balance?
 Decrease $715.00
 What adjustment is made?
 Debit Supplies Expense $715.00
 Credit Supplies $715.00
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
10
SUPPLIES ADJUSTMENT ON A
WORK SHEET
page 158
2
3
1
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-2
11
PLANNING INSURANCE ADJUSTMENT
page 159
 What is the balance of Prepaid Insurance?
 $1200.00
 What should the balance be for this account?
 $1100.00
 What must be dome to correct the account balance?
 Decrease $100.00
 What adjustment is made?
 Debit Insurance Expense $100.00
 Credit Prepaid Insurance $100.00
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
12
PREPAID INSURANCE ADJUSTMENT
ON A WORK SHEET
page 159
2
3
1
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-2
13
PROVING THE ADJUSTMENTS COLUMNS
page 160
OF A WORK SHEET
1
2
1. Rule a single line.
2. Add both the Adjustments Debit and Credit columns.
Write each column’s total.
3. Rule double lines.
CENTURY 21 ACCOUNTING © Thomson/South-Western
3
LESSON 6-2
14
TERM REVIEW
page 161
 adjustments
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-2
LESSON 6-3
Extending Financial
Statement Information
on a Work Sheet
CENTURY 21 ACCOUNTING © Thomson/South-Western
16
FINANCIAL STATEMENT BALANCES
page 162
 Balance Sheet
 Reports assets, liabilities, and owner’s equity on a specific
date.
 Income Statement
 Shows the revenue and expenses for a fiscal period.
 Net Income
 The difference between total revenue and total expenses
 Net loss
 When total expenses are greater than total revenue
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
17
EXTENDING BALANCE SHEET ACCOUNT
page 162
BALANCES ON A WORK SHEET
2
1. Debit balances without adjustments
2. Debit balances with adjustments
3. Credit balances without adjustments
CENTURY 21 ACCOUNTING © Thomson/South-Western
1
3
LESSON 6-3
18
EXTENDING INCOME STATEMENT ACCOUNT
BALANCES ON A WORK SHEET
page 163
1
2
3
1. Sales balance
2. Expense balances without adjustments
3. Expense balances with adjustments
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-3
19
RECORDING NET INCOME, AND
TOTALING AND RULING A WORK SHEET
4
1. Single rule
2. Totals
3. Net income
3
4. Extend net income
5. Single rule
CENTURY 21 ACCOUNTING © Thomson/South-Western
6
page 164
1
2
7
5
6. Totals
7. Double rule
LESSON 6-3
20
CALCULATING AND RECORDING A NET
LOSS ON A WORK SHEET
page 165
1
3
1.
2.
3.
4.
Single rule
Totals
Net loss
Extend net loss
CENTURY 21 ACCOUNTING © Thomson/South-Western
4
2
LESSON 6-3
21
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.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-2
22
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-2
23
1
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-2
24
1
2
496400
10000
15000
10000
102500
120000
(a)
(b)
6
71500
10000
20000
5000
500000
4
62500
356500
356500
21300
(b)
10000
(a)
71500
2800
30000
Net Income
20000
5000
500000
3
62500
11000
881500 881500
10000
31000
110000
81500
8
21300
10000
2800
7
30000
71500
5
11000
81500 146600 356500 734900 525000
209900
209900
356500 356500 734900 734900
9
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-2
25
TERMS REVIEW




page 166
balance sheet
income statement
net income
net loss
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-3
LESSON 6-4
Finding and Correcting
Errors on the Work Sheet
CENTURY 21 ACCOUNTING © Thomson/South-Western
27
FINDING ERRORS ON A WORK SHEET
page 167
 The difference is 1, such as $.01, $.10, $1.00, $10.00
 Most likely addition error, add again.
 The difference can be divided by 2
 The amount may be in the wrong column (DR instead of CR)
 The difference can be divided evenly by 9
 Transposition (54 instead of 45)
 Slide ($120.00 becomes $1200.00)
 The difference is an omitted amount
 Look for an amount equal to the difference that you forgot to
extend.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-1
28
CORRECTING AN ERROR IN POSTING TO
page 168
THE WRONG ACCOUNT
2 Correct entry
1 Incorrect entry
1. Draw a line through the entire incorrect entry. Recalculate the account
balance and correct the work sheet.
2. Record the posting in the correct account. Recalculate the account
balance, and correct the work sheet.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-4
29
CORRECTING AN INCORRECT AMOUNT
page 169
2
1
3
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.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-4
30
CORRECTING AN AMOUNT POSTED TO
THE WRONG COLUMN
page 169
2
1
3
5
4
6
4. Draw a line through the incorrect item in the account.
5. Record the posting in the correct amount column.
6. Recalculate the account balance, and correct the work sheet.
CENTURY 21 ACCOUNTING © Thomson/South-Western
LESSON 6-4