LESSON 22-1

1. LESSON 22-1 Preparing a Work Sheet for a Corporation

2. 1. Debit Interest Receivable. INTEREST INCOME ADJUSTMENT page 638 1 2 2. Credit Interest Income. LESSON 22-1

3. SUPPLIES ADJUSTMENT page 638 1 2 1. Credit Supplies. 2. Debit Supplies Expense. LESSON 22-1

4. FEDERAL INCOME TAX ADJUSTMENT page 639 2 1 1. Debit Federal Income Tax Expense. 2. Credit Federal Income Tax Payable. LESSON 22-1

5. 1 3 2 5 COMPLETING A WORK SHEET page 641 4 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. LESSON 22-1

6. LESSON 22-2 Preparing an Income Statement

7. INCOME STATEMENT page 645 LESSON 22-1

8. INCOME STATEMENT page 645 LESSON 22-1

9. INCOME STATEMENT page 645 LESSON 22-1

10. Cost of Merchandise Sold ÷ Net Sales = Cost of Merchandise Sold Component Percentage ANALYZING AN INCOME STATEMENT page 647 $1,190,794.80 ÷ $2,078,876.70 = 57.3% LESSON 22-1

11. LESSON 22-3 Preparing a Statement of Stockholders’ Equity and Balance Sheet

12. STATEMENT OF STOCKHOLDERS’ EQUITY page 649 1 2 3 1. Write the heading. 2. Prepare the capital stock section. 3. Prepare the retained earnings section. LESSON 22-1

13. BALANCE SHEET page 650 LESSON 22-1

14. BALANCE SHEET page 650 LESSON 22-1

15. Total Current Assets Total Current Assets – ÷ Total Current Liabilities Total Current Liabilities = = WorkingCapital CurrentRatio ANALYZING A BALANCE SHEET page 652 Working Capital $229,594.55 – $57,494.53 = $172,100.02 Current Ratio $229,594.55 ÷ $57,494.53 = 4.0 to 1 LESSON 22-1

16. TERMS REVIEW page 653 • long-term liabilities • working capital • current ratio LESSON 22-1

17. LESSON 22-4 Adjusting, Closing, and Reversing Entries for a Corporation

18. ADJUSTING ENTRIES page 654 LESSON 22-1

19. CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCES page 655 1 2 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. LESSON 22-1

20. CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCES page 656 1. Enter the account title Income Summary. 1 3 2. Enter the balance of every account in the Income Statement debit column as a credit. 2 3. Enter the total of the credit entries as a debit to Income Summary. LESSON 22-1

21. CLOSING ENTRY TO RECORD NET INCOME page 657 1 2 1. Debit Income Summary. 2. Credit Retained Earnings. LESSON 22-1

22. CLOSING ENTRY FOR DIVIDENDS page 657 1 2 1. Debit Retained Earnings. 2. Credit Dividends. LESSON 22-1

23. 1 REVERSING ENTRIES page 658 1. Reverse the entry that created a balance in Interest Receivable. 2. Reverse the entry that created a balance in Interest Payable. 3. Reverse the entry that created a balance in Federal Income Tax Payable. 2 3 LESSON 22-1

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

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