Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7 th Edition1 Chapter 8 Completing the...

Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition1

Chapter 8Completing the Accounting Cycle

8


Adjusting Entries and the Worksheet

This tutorial guides you through creating a worksheet and using it to record adjusting entries.

For more detailed instructions, refer to Section 8.2 of the Accounting 1 textbook.



Start with a blank worksheet.



Record the header in the familiar “who, what, when” format: ?



List all accounts in order (?), just as you would on a trial balance.



Enter the ? and ? balances of each ledger account, and ? and ? the trial balance.



Some amounts on the trial balance are out of date.



The Supplies account has a balance of $1480.90.



The Supplies account should have a balance of $526.00, based on supplies that were used up during the year.



The required adjustment is $?



The amount of supplies used up is an ? (an income statement account).



The amount of supplies used up is the ? (an income statement account).



The Worksheet must incorporate these differences.



The Worksheet must incorporate these differences. This is the first adjustment, so it is labelled as 1.



There are other adjustments required before the trial balance is up to date.



The Prepaid Insurance account has a balance of $6564.00.



The Prepaid Insurance account should have a balance of $4070.00, based on insurance that was used up during the year.



The required adjustment is $?



The amount of insurance used up is an ? (an income statement account).



The amount of insurance used up is the ? (an income statement account).



The Worksheet must incorporate these differences.



The Worksheet must incorporate these differences. This is the second adjustment, so it is labelled as 2.



Late arriving invoices need to be included.



Late arriving invoices need to be included. The total of the late invoices is a credit to ? (new amounts owed).



The Worksheet showing adjustments for Late Arriving Invoices.



Unearned revenue needs to be included.



Unearned revenue needs to be included. Unearned revenue is a credit to the Unearned Revenue account.



The Worksheet showing adjustments for Unearned Revenue.



Once all adjustments have been made, ?



Next, transfer ? column. Be sure to account for any adjustments.



Transfer all Income ? Be sure to account for any adjustments.



? the Income Statement and Balance Sheet columns.



Calculate the Net Income (?). Net Income goes in the outer of the last four columns.



Rule and total the last four columns of the Worksheet.



In the case of a Net Loss, the net loss amounts would go in the inner of the last four columns.

If a company has a net loss, it means expenses are greater than revenues. The net loss amounts need to go in the inner of the last four columns, or the Worksheet will not balance.

Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7 th Edition1 Chapter 8 Completing the...

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