Preparing a worksheet

Chapter 6

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– To determine our net income

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

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash            

Petty Cash            

Account Rec. - Kids Time            

Accounts Rec. - Learn N Play            

Supplies          

Step #1

• Take all of the balances from the general ledger and place them into the Trial balance columns of the worksheet.

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272              

Petty Cash 200              

Account Rec. - Kids Time 100              

Accounts Rec. - Learn N Play 20              

Supplies 4751              

Prepaid Insurance 1200              

Accounts Pay - Ling Music Supp   1360            

Accounts Pay - Sullivan Off. Supp   20            

Barbara Trevino, Cap   10000            

Barbara Trevino, Draw 600              

Income Summary                

Sales   4411            

Advertising Expense 2730              

Insurance Expense                

Miscellaneous Expense 10              

Rent Expense 250              

Supplies Expense                

Utilities Expense 115              

                 

Net Income                

156791 156791

Work on “on your own” on page153

Adjustments

Section 2

Definition of adjustment

The number of things change from the beginning of the year to the end of the year.

Supplies Beg------------------ Supplies End

100 10

Prepaid Insurance Beg -----PPI End

1200 1100

• We record those changes (adjustments) in the adjustment columns.

• Because both of these accounts are assets. If the number goes up we Debit

• If it goes down we credit

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272              

Petty Cash 200              

Account Rec. - Kids Time 100              

Accounts Rec. - Learn N Play 20              

Supplies 4751     2564        

Prepaid Insurance 1200     100        

Accounts Pay - Ling Music Supp   1360            

Accounts Pay - Sullivan Off. Supp   20            

Barbara Trevino, Cap   10000            

Barbara Trevino, Draw 600              

Income Summary                

Sales   4411            

Advertising Expense 2730              

Insurance Expense     100          

Miscellaneous Expense 10              

Rent Expense 250              

Supplies Expense     2564          

Utilities Expense 115              

  15791 15791 2664 2664        

Net Income                

a

a

b

b

• Please work “on your own” on page 158

Chapter 8

Section 3

Extending Amounts Across the worksheet

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, and making sure that the two columns equal.

• Step 2– Take the numbers and move them into the

proper columns

Three major rules to remember

• Accounts that go on the Income Statement– Revenue, expenses

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272              

Petty Cash 200              

Account Rec. - Kids Time 100              

Accounts Rec. - Learn N Play 20              

Supplies 4751     2564        

Prepaid Insurance 1200     100        

Accounts Pay - Ling Music Supp   1360            

Accounts Pay - Sullivan Off. Supp   20            

Barbara Trevino, Cap   10000            

Barbara Trevino, Draw 600              

Income Summary                

Sales   4411       4411    

Advertising Expense 2730       2730      

Insurance Expense     100   100      

Miscellaneous Expense 10       10      

Rent Expense 250       250      

Supplies Expense     2564   2564      

Utilities Expense 115       115      

  15791 15791 2664 2664        

Net Income                

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

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272           8272  

Petty Cash 200           200  

Account Rec. - Kids Time 100           100  

Accounts Rec. - Learn N Play 20           20  

Supplies 4751     2564     2187  

Prepaid Insurance 1200     100     1100  

Accounts Pay - Ling Music Supp   1360           1360

Accounts Pay - Sullivan Off. Supp   20           20

Barbara Trevino, Cap   10000           10000

Barbara Trevino, Draw 600           600  

Income Summary                

Sales   4411       4411    

Advertising Expense 2730       2730      

Insurance Expense     100   100      

Miscellaneous Expense 10       10      

Rent Expense 250       250      

Supplies Expense     2564   2564      

Utilities Expense 115       115      

  15791 15791 2664 2664        

Net Income                

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, every thing after goes in the income statement

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272           8272  

Petty Cash 200           200  

Account Rec. - Kids Time 100           100  

Accounts Rec. - Learn N Play 20           20  

Supplies 4751     2564     2187  

Prepaid Insureance 1200     100     1100  

Accounts Pay - Ling Music Supp   1360           1360

Accounts Pay - Sullivan Off. Supp   20           20

Barbara Trevino, Cap   10000           10000

Barbara Trevino, Draw 600           600  

Income Summary                

Sales   4411       4411    

Advertising Expense 2730       2730      

Insureance Expense     100   100      

Miscellaneous Expense 10       10      

Rent Expense 250       250      

Supplies Expense     2564   2564      

Utilities Expense 115       115      

  15791 15791 2664 2664        

Net Income                

Total the columns

• Total the columns in the income statement

• Total the columns in the balance sheet

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272           8272  

Petty Cash 200           200  

Account Rec. - Kids Time 100           100  

Accounts Rec. - Learn N Play 20           20  

Supplies 4751     2564     2187  

Prepaid Insurance 1200     100     1100  

Accounts Pay - Ling Music Supp   1360           1360

Accounts Pay - Sullivan Off. Supp   20           20

Barbara Trevino, Cap   10000           10000

Barbara Trevino, Draw 600           600  

Income Summary                

Sales   4411       4411    

Advertising Expense 2730       2730      

Insurance Expense     100   100      

Miscellaneous Expense 10       10      

Rent Expense 250       250      

Supplies Expense     2564   2564      

Utilities Expense 115       115      

  15791 15791 2664 2664 3312 4411 12479 11380

       

Net Income                

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.

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272           8272  

Petty Cash 200           200  

Account Rec. - Kids Time 100           100  

Accounts Rec. - Learn N Play 20           20  

Supplies 4751     2564     2187  

Prepaid Insureance 1200     100     1100  

Accounts Pay - Ling Music Supp   1360           1360

Accounts Pay - Sullivan Off. Supp   20           20

Barbara Trevino, Cap   10000           10000

Barbara Trevino, Draw 600           600  

Income Summary                

Sales   4411       4411    

Advertising Expense 2730       2730      

Insureance Expense     100   100      

Miscellaneous Expense 10       10      

Rent Expense 250       250      

Supplies Expense     2564   2564      

Utilities Expense 115       115      

  15791 15791 2664 2664 3312 4411 12479 11380

Net Income         1099     1099

                 

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.

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272           8272  

Petty Cash 200           200  

Account Rec. - Kids Time 100           100  

Accounts Rec. - Learn N Play 20           20  

Supplies 4751     2564     2187  

Prepaid Insureance 1200     100     1100  

Accounts Pay - Ling Music Supp   1360           1360

Accounts Pay - Sullivan Off. Supp   20           20

Barbara Trevino, Cap   10000           10000

Barbara Trevino, Draw 600           600  

Income Summary                

Sales   4411       4411    

Advertising Expense 2730       2730      

Insureance Expense     100   100      

Miscellaneous Expense 10       10      

Rent Expense 250       250      

Supplies Expense     2564   2564      

Utilities Expense 115       115      

  15791 15791 2664 2664 3312 4411 12479 11380

Net Income         1099     1099                 

Encore Music

Worksheet

For Month Ending August 31

Account Title Trial Balance Adjustments Income Statement Balance Sheet

Cash 8272           8272  

Petty Cash 200           200  

Account Rec. - Kids Time 100           100  

Accounts Rec. - Learn N Play 20           20  

Supplies 4751     2564     2187  

Prepaid Insurance 1200     100     1100  

Accounts Pay - Ling Music Supp   1360           1360

Accounts Pay - Sullivan Off. Supp   20           20

Barbara Trevino, Cap   10000           10000

Barbara Trevino, Draw 600           600  

Income Summary                

Sales   4411       4411    

Advertising Expense 2730       2730      

Insurance Expense     100   100      

Miscellaneous Expense 10       10      

Rent Expense 250       250      

Supplies Expense     2564   2564      

Utilities Expense 115       115      

  15791 15791 2664 2664 3312 4411 12479 11380

Net Income         1099     1099

          4411 4411 12479 12479

• Problems

• 7-1,2,3,4,5