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Adjustments and the Worksheet

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  1. Chapter 5 Adjustments and the Worksheet Section 2: Financial Statements Section Objectives • Complete the worksheet. • Prepare an income statement, statement of owner's equity, and balance sheet from the completed worksheet. • 5. Journalize and post the adjusting entries.

  2. Journalizing and Posting Adjusting Entries

  3. Objective 5 Journalize and post the adjusting entries.

  4. The worksheet is NOT • A financial statement • A permanent part of the accounting record • It is only a tool.

  5. The adjustments shown on the worksheet must become part of the permanent accounting record. Each adjustment is journalized and posted to the general ledger accounts. Recording adjusting entries is the sixth step of the accounting cycle.

  6. The Accounting Cycle Step 2 Journalize the data about transactions Step 3Post the data about transactions Step 4 Prepare a worksheet Step 1Analyze transactions Step 5Prepare financial statements Step 9Interpret the financial information Step 6 Record adjusting entries Step 6Record adjusting entries Step 7Record closing entries Step 8Prepare a postclosing trial balance

  7. QUESTION: What adjustments must JT’s Consulting Services record for the month? ANSWER: • Adjustment for supplies used • Adjustment for expired rent • Adjustment for depreciation

  8. After journalizing the adjusting entries, post them to the general ledger accounts.

  9. 2007 Dec. 31 J3 1000.00 1000.00 Adjusting GENERAL JOURNAL PAGE 3 POST. DATE DESCRIPTION REF . DEBIT CREDIT 2007 Adjusting Entries Dec. 31 Supplies Expense 517 1000.00 Supplies 121 1000.00 31 Rent Expense 520 3,500.00 Prepaid Rent 137 3,500.00 31 Depr. Expense–Equipment 523 367.00 Accum. Depr.–Equipment 142 367.00 ACCOUNT Supplies Expense ACCOUNT NO. 517 POST. BALANCE DATE DESCRIPTION REF. DEBIT CREDIT DEBIT CREDIT

  10. R E V I E W SECTION Complete the following sentences: The worksheet is not part of the permanent ________________. accounting record On a worksheet, the adjusted balance of the Supplies account is extended to the _____________ _____ column. Balance Sheet Debit A balance sheet that lists the asset accounts first, followed by liabilities and owner’s equity, is a(n) __________ balance sheet. report form

  11. R E V I E W SECTION Complete the following sentences: The Drawing account is extended to the _____ column of the _____________ section. Balance Sheet Debit The amount of the capital account from the Balance Sheet section of the worksheet appears in the ________________________. statement of owner’s equity Income Statement Balance Sheet The ________________ and _____________ sections of the worksheet are used to prepare financial statements.

  12. Thank You for using College Accounting, 11th Edition Price • Haddock • Brock