adjusting entries and the worksheet. what is a worksheet? if software is used, the data is almost...

Adjusting Entries and the Worksheet

What is a worksheet?

• If software is used, the data is almost ready to be presented.

• If we do not use software, accountants regularly use a worksheet. -It is INFORMAL.

• It is meant to organize all the information for the finalized financial statements.

• There are 5 things to know:

What is a Worksheet?

• 1. First 3 columns: Account titles and trial balance amounts.-These have been prepared ahead of time by clerks.

• 2. Next two columns are for adjustments. -These prepared by a senior accountant.

• 3. Income statement information in the trial balance columns are copied to the income statement columns.-If an adjustment affects the income statement, a new amount is calculated before it is copied.

What is a Worksheet?

• 4. Balance sheet information in the trial balance columns are copied.-If an adjustment affects this information, it too is calculated before copying.

• 5. You total the columns. Net income is revealed, the worksheet is balance and RULED to prove the equality.

• We will be working with Global Logistics.

Adjusting for Insurance Used

• The worksheet shows that the value of 4 insurance policies is $6564.

• We know though, that the value of insurance has to be updated. What is the value on December 31?

Extending the Worksheet

• We have to move information from the trial balance and adjustments to the Income Statement and Balance Sheet.

• Step one: Look at each item. Add or subtract depending on the adjustment made (if any).

• Step two: Move the value from step 1 to one of the last 4 items.-Debits to debits, credits to credits.

Let’s Balance the Entire Worksheet

• 1. Total the last 4 columns.

• 2. What is the difference between the income statement columns? What is the difference between the balance sheet columns?

• 3. Totals must be the same. Correct if they are not.

• 4. Write in Net Income in the Accounts column. -Figure out the totals in the last 4 columns. Single line above, double line below.

Preparing the Financial Statements

• Very easy step.

• ALL THE INFORMATION YOU NEED IS THERE.

• Account balance, total revenue, total expenses, and net income(loss).

• Posting is the final step.