Chapter 5 Unit 9 The Work Sheet

1. Chapter 5 Unit 9The Work Sheet Mrs. Joudrey

2. Learning Outcomes After this lesson you will be able to prepare a work sheet

3. The Work Sheet • The work sheet is a large sheet of accounting paper used to organize data for the trail balance, income statement, and balance sheet all on one piece of paper. This sheet can be referred to as the “working papers”.

4. The Work Sheet • Account titles and balances are taken from the general ledger. All of the account names are listed under account title and the account numbers are listed next to the names.

5. The Work Sheet • The balances are recorded in the trial balance columns (one for debit and one for credit) and then they are either copied over to the income statement columns or the balance sheet columns. Remember that accounts are listed in EITHER the income statement or the balance sheet – but never both.

6. The Work Sheet

7. Steps in Preparing a Work Sheet • Step 1: Write the heading - (same as other financial statement – who, what, when) • Step 2: Record the trail balance – record the titles and balances of all general ledger accounts. Add the debit balances and the credit balances to see if they balance.

8. Steps in Preparing a Work Sheet • Step 3: Transfer the Balance Sheet Items – Assets, Liabilities, and Owner’s Equity (including drawings). These should be the first items listed. • Step 4: Transfer the Income Statement Items – Revenue and Expenses. These should be recorded on the second half of the sheet.

9. Steps in Preparing a Work Sheet • Step 5: Complete the Income Statement Section – The net income/net loss is determined by: • Draw a single line below the income statement debit and credit columns and the balance sheet debit and credit columns and add each row. • Write the totals below this line – note they will be different (they should not balance)

10. Steps in Preparing a Work Sheet • Figure out the difference between the debit and credit totals on the income statement section. • Write the difference in the column with the smaller amount (ex. If there was $500 in the debit and $400 in the credit you would record the $100 difference in the credit column)

11. Steps in Preparing a Work Sheet • If the CREDIT amount (the revenue amount) is larger there is a net income and you will write the word “net Income” in the Account Title column (if debit amount (the expense amount) is larger you will write “net loss” in the Account Title column).

12. Steps in Preparing a Work Sheet • Step 6: Complete the Balance Sheet Section – after adding up the debits and the credit you will have to record the net income or net loss for your balance sheet to balance. You will record a net income in the credit column and a net loss in the debit column of the balance sheet.

13. Steps in Preparing a Work Sheet • Step 7: Draw your lines – draw two lines under all totals to indicate completion and proof that everything has worked out (balanced).

14. Activity • Use the worksheet provided on the back of your notes to complete the income statement and balance sheet.

15. Using the Work Sheet • You can use a worksheet to easily create an income statement or balance sheet. You would take the accounts and the amounts found on these “working papers”

16. Activity • Mimio work sheet – individual • Please complete exercise 1 page 174 on white boards in groups • Please complete exercise 2-3 pages 174 -176