Professional Documents
Culture Documents
Chapter 4-1
Study Objectives
1. 2. 3.
Prepare a worksheet. Explain the process of closing the books. Describe the content and purpose of a post-closing trial balance.
4.
5.
6.
Chapter 4-2
Using a Worksheet
Steps in preparation
Preparing financial statements
Current assets
Long-term investments Property, plant, and equipment Intangible assets Current liabilities Long-term liabilities
Chapter 4-3
Stockholders equity
Using A Worksheet
Worksheet
A multiple-column form used in preparing financial statements. Not a permanent accounting record. Five step process.
Chapter 4-4
SO 1 Prepare a worksheet.
Chapter 4-5
SO 1 Prepare a worksheet.
Other data: 1. Supplies on hand total $140. 2. Depreciation for March is $200. 3. Unearned revenue amounted to $130 on March 31. 4. Accrued salaries are $350. Instructions a. Prepare and complete the worksheet.
SO 1 Prepare a worksheet.
Chapter 4-7
SO 1 Prepare a worksheet.
Adjustments Key: (a) Supplies used. (b) Depreciation expense. (c) Service revenue earned. (d) Salaries accrued.
Chapter 4-8
Enter adjustment amounts, total adjustments columns, and check for equality.
SO 1 Prepare a worksheet.
Chapter 4-9
Total the adjusted trial balance columns and check for equality.
SO 1 Prepare a worksheet.
Chapter 4-10
Extend all revenue and expense account balances to the income statement columns.
SO 1 Prepare a worksheet.
3,170 1,050 200 960 200 2,410 3,170 11,040 350 10,280
Chapter 4-11
Extend all asset, liability, and equity account balances to the balance sheet columns.
SO 1 Prepare a worksheet.
3,170 1,050 200 960 200 2,410 760 3,170 3,170 3,170 11,040 11,040 350 10,280 760 11,040
SO 1 Prepare a worksheet.
Worksheet
Income statement is prepared from the income statement columns. Balance sheet and retained earnings statement are prepared from the balance sheet columns.
Chapter 4-13
SO 1 Prepare a worksheet.
3,170
SO 1 Prepare a worksheet.
Undercover Roofing Retained Earnings Statement For the Month Ended March 31, 2008 Retained earnings, beginning Add: Net income Less: Dividends Retained earnings, ending $ 6,000 760 (600) 6,160
Chapter 4-15
SO 1 Prepare a worksheet.
6,000 1,400 $
4,600 9,040
Liabilities and Stockholders' Equity Current liabilities Accounts payable Salaries payable Unearned revenue Total current liabilities Stockholders' equity Common stock Retained earnings Total liabilities and stockholder's equity
Chapter 4-16
SO 1 Prepare a worksheet.
Adjusting Entries
The adjusting entries are prepared from the adjustments columns of the worksheet. Journalizing and posting of adjusting entries follows the preparation of financial statements when a worksheet is used.
Chapter 4-17
SO 1 Prepare a worksheet.
Date Mar. 31
Debit 960
Credit 960
Chapter 4-18
Chapter 4-19
Chapter 4-20
Note:
Dividends are closed directly to Retained Earnings and not to Income Summary because Dividends are not an expense.
Illustration 4-6
Retained Earnings is a permanent account; all other accounts are temporary accounts.
Chapter 4-21
760
600
Post-Closing Trial Balance Account Titles Dr. Cr. Cash $ 2,500 Accounts Receivable 1,800 Roofing Supplies 140 Equipment 6,000 Accumulated Depreciation $ 1,400 Accounts Payable 1,400 Salaries payable 350 Unearned Revenue 130 Common Stock 1,000 Retained Earnings 6,160 Totals $ 10,440 $ 10,440
Chapter 4-23
Chapter 4-24
Instead of preparing a correcting entry, it is possible to reverse the incorrect entry and then prepare the correct entry.
Chapter 4-25
Cash Service revenue Cash Accounts receivable Service revenue Accounts receivable
Standard Classifications
Assets Liabilities and Owners Equity Current assets Long-term investments Property, plant, and equipment Intangible assets
Chapter 4-28
Illustration 4-17
Chapter 4-29
Companies usually list current asset accounts in the order they expect to convert them into cash.
Chapter 4-30
Investments in long-term assets such as land or buildings that a company is not currently using in its operating activities.
Illustration 4-20
Chapter 4-31
Chapter 4-33
Chapter 4-34
Review Question
Patents and copyrights are a. Current assets. b. Intangible assets. c. Long-term investments. d. Property, plant, and equipment.
Chapter 4-35
Chapter 4-37
Chapter 4-38
Review Question
Which of the following is not a long-term liability? a. Bonds payable b. Current maturities of long-term obligations c. Long-term notes payable d. Mortgages payable
Chapter 4-39
Chapter 4-40