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Preparing a worksheet

Preparing a worksheet. Chapter 7 Section 1. What is the worksheet. Worksheet is used for a couple of things: Recheck our trial balance To make adjustments to accounts To prepare our balance sheet at the end of the year To prepare out income statement at the end of the year

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Preparing a worksheet

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  1. Preparing a worksheet Chapter 7 Section 1

  2. What is the worksheet • Worksheet is used for a couple of things: • Recheck our trial balance • To make adjustments to accounts • To prepare our balance sheet at the end of the year • To prepare out income statement at the end of the year • To determine our net income

  3. The 6th step of the Accounting Cycle: The work Sheet

  4. Step #1 • Take all of the balances from the general ledger and place them into the Trial balance columns of the worksheet. • Total both the debit and the credit columns to ensure that you are in balance and that you have correctly copied the balances from the ledger.

  5. 156791 156791

  6. Work on “On Your Own” on page 153

  7. Adjustments Section 2

  8. Definition of adjustment The number of things change from the beginning of the year to the end of the year. 1/1/0X 12/31/0X Supplies ------------------ Supplies 100 10 Prepaid Insurance -------- PPI 1200 1100

  9. We record those changes (adjustments) in the adjustment columns. • Because both of these accounts we are adjusting are assets. • If the number goes up we Debit/Increase the balance • If it goes down we Credit/Decrease the balance

  10. a b b a

  11. Please work “On Your Own” on page 158

  12. Chapter 8 Section 3 Extending Amounts Across the worksheet

  13. Next step in preparing a work sheet • Step 1 • After placing all of the accounts in the proper places and putting the numbers that correspond with them, make sure that the two columns equal. • Step 2 • Take the numbers and move them into the proper columns • Balance statement accounts go to columns 7 and 8 • (i.e. cash through capital) • Income statement accounts go to columns 5 and 6 • (i.e. revenue/sales through expenses)

  14. Three major rules to remember • Accounts that go on the Income Statement • Revenue, expenses • Accounts that go on the Balance Sheet • Assets, Liabilities, Owners Equity

  15. Three major rules to remember • Accounts that go on the Income Statement • Revenue, expenses • Accounts that go on the Balance Sheet • Assets, Liabilities, Owners Equity • If all else fails, everything above the INCOME SUMMARY goes in the balance sheet columns, every thing below goes in the income statement columns

  16. Total the columns • Total the columns in the income statement • Total the columns in the balance sheet

  17. Finishing the work sheet • In the income statement • Take the credit side and subtract out the debit side. • In the balance sheet columns • Take the debit side and subtract out the credit side.

  18. Finishing the work sheet • In the income statement • Take the credit side and subtract out the debit side. • In the balance sheet columns • Take the debit side and subtract out the credit side. • Rule of thumb after subtracting the numbers it always goes under the smaller of the amounts so that we may get it to equal.

  19. Let’s complete the worksheet. Do On Your Own on Page 163 in the textbook. • Problems • 7-1, 2, 3, 4, 5

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