Chapter 8 Completing the Accounting Cycle

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

2. Adjusting Entries and the WorksheetThis 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. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

3. Adjusting Entries and the Worksheet Start with a blank worksheet. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

4. Adjusting Entries and the Worksheet Record the header in the familiar “who, what, when” format: the name of the company, the type of financial statement, and the date. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

5. Adjusting Entries and the Worksheet List all accounts in order (assets, liabilities, then equity), just as you would on a trial balance. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

6. Adjusting Entries and the Worksheet Enter the debit and credit balances of each ledger account, and rule and total the trial balance. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

7. Adjusting Entries and the Worksheet Some amounts on the trial balance are out of date. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

8. Adjusting Entries and the Worksheet The Supplies account has a balance of $1480.90. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

9. Adjusting Entries and the Worksheet The Supplies account should have a balance of $526.00, based on supplies that were used up during the year. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

10. Adjusting Entries and the Worksheet The required adjustment is $954.90. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

11. Adjusting Entries and the Worksheet The amount of supplies used up is an expense (an income statement account). Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

12. Adjusting Entries and the Worksheet The amount of supplies used up is the Supplies Expense (an income statement account). Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

13. Adjusting Entries and the Worksheet The Worksheet must incorporate these differences. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

14. Adjusting Entries and the Worksheet The Worksheet must incorporate these differences. This is the first adjustment, so it is labelled as 1. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

15. Adjusting Entries and the Worksheet There are other adjustments required before the trial balance is up to date. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

16. Adjusting Entries and the Worksheet The Prepaid Insurance account has a balance of $6564.00. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

17. Adjusting Entries and the Worksheet The Prepaid Insurance account should have a balance of $4070.00, based on insurance that was used up during the year. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

18. Adjusting Entries and the Worksheet The required adjustment is $2494.00. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

19. Adjusting Entries and the Worksheet The amount of insurance used up is an expense (an income statement account). Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

20. Adjusting Entries and the Worksheet The amount of insurance used up is the Insurance Expense (an income statement account). Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

21. Adjusting Entries and the Worksheet The Worksheet must incorporate these differences. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

22. Adjusting Entries and the Worksheet The Worksheet must incorporate these differences. This is the second adjustment, so it is labelled as 2. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

23. Adjusting Entries and the Worksheet Late arriving invoices need to be included. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

24. Adjusting Entries and the Worksheet Late arriving invoices need to be included. The total of the late invoices is a credit to Accounts Payable (new amounts owed). Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

25. Adjusting Entries and the Worksheet The Worksheet showing adjustments for Late Arriving Invoices. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

26. Adjusting Entries and the Worksheet The Worksheet showing adjustments for Late Arriving Invoices. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

27. Adjusting Entries and the Worksheet The Worksheet showing adjustments for Late Arriving Invoices. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

28. Adjusting Entries and the Worksheet The Worksheet showing adjustments for Late Arriving Invoices. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

29. Adjusting Entries and the Worksheet The Worksheet showing adjustments for Late Arriving Invoices. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

30. Adjusting Entries and the Worksheet Unearned revenue needs to be included. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

31. Adjusting Entries and the Worksheet Unearned revenue needs to be included. Unearned revenue is a credit to the Unearned Revenue account. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

32. Adjusting Entries and the Worksheet The Worksheet showing adjustments for Unearned Revenue. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

33. Adjusting Entries and the Worksheet The Worksheet showing adjustments for Unearned Revenue. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

34. Adjusting Entries and the Worksheet Once all adjustments have been made, rule and total the Adjustments column. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

35. Adjusting Entries and the Worksheet Next, transfer all Balance Sheet accounts to the Balance Sheet column. Be sure to account for any adjustments. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

36. Adjusting Entries and the Worksheet Transfer all Income Statement accounts to the Income Statement column. Be sure to account for any adjustments. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

37. Adjusting Entries and the Worksheet Rule and total the Income Statement and Balance Sheet columns. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

38. Adjusting Entries and the Worksheet Calculate the Net Income (Revenue – Expenses). Net Income goes in the outer of the last four columns. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

39. Adjusting Entries and the Worksheet Rule and total the last four columns of the Worksheet. Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition

40. Adjusting Entries and 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, 7th Edition