the heading should identify the entity, the document and the time period

AccountDr Cr Dr Cr Dr Cr Dr Cr Dr Cr

Finlay InteriorsWork Sheet

For Month Ended January 31, 2005

Balance Sheet Unadjusted Trial Balance

Adjustments Adjusted Trial

Balance Income Statement

The heading should identify the entity, the document and

the time period.

AccountDr Cr Dr Cr Dr Cr Dr Cr Dr Cr



Balance Sheet Unadjusted Trial

Balance Adjustments

Adjusted Trial Balance

Income Statement

The worksheet collects and summarizes the information used to prepare financial statements, adjusting entries and closing entries.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 3,600

Prepaid insurance 2,400

Furniture 6,000

Accumulated amortization, furniture

Accounts payable 200

Unearned consulting revenue 3,000

Notes Payable 6,000

Carol Finlay, capital 10,000

Carol Finlay, withdrawals 600

Consulting revenue 3,800

Rental revenue 300

Salaries expense 1,400

Rent expense 1,000

Utilities expense 230



Unadjusted Trial Balance Adjustments Adjusted Trial Balance

Step 1

Enter the unadjusted trial balance on the

worksheet

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 3,600


Furniture 6,000




Notes Payable 6,000




Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300



Unadjusted Trial Balance Adjustments Adjusted Trial Balance

These two columns totals must be in balance!

Dr = Cr

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 3,600


Furniture 6,000




Notes Payable 6,000




Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300



Trial Balance Adjustments Adjusted Trial Balance

Step 2

Enter the adjustments

directly onto the worksheet

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 3,600


Furniture 6,000




Notes Payable 6,000




Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300

Insurance expense

Supplies expense

Amortization expense, furniture

Salaries payable

Interest expense

Interest payable

Accounts receivable




You may need to add additional accounts

Step 2



Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 3,600 b) 1,050

Prepaid insurance 2,400 a) 100

Furniture 6,000

Accumulated amortization, furniture c) 200


Unearned consulting revenue 3,000 d) 250

Notes Payable 6,000



Consulting revenue 3,800 d) 250

g) 1,800

Rental revenue 300

Salaries expense 1,400 f) 70

Rent expense 1,000


Totals 23,300 23,300

Insurance expense a) 100

Supplies expense b) 1,050

Amortization expense, furniture c) 200

Salaries payable f) 70

Interest expense e) 35

Interest payable e) 35

Accounts receivable g) 1,800


Work Sheet


Step 2



Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 3,600 b) 1,050


Furniture 6,000




Notes Payable 6,000




g) 1,800

Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300








Totals 3,505 3,505




These two columns totals must be in balance!

Dr = Cr

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 3,600 b) 1,050


Furniture 6,000




Notes Payable 6,000




g) 1,800

Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300








Totals 3,505 3,505



Step 3

Sum the unadjusted trial balance with the

adjustments and enter the total in the adjusted trial balance column.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 3,600 b) 1,050


Furniture 6,000




Notes Payable 6,000




g) 1,800

Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300








Totals 3,505 3,505




Helpful Hint #1

Remember that if an account has a debit balance

on the unadjusted trial balance, it will have a debit

balance on the adjusted trial balance as well.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 3,600 b) 1,050 2,550


Furniture 6,000




Notes Payable 6,000




g) 1,800

Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300








Totals 3,505 3,505




Helpful Hint #2

A debit balance is increased by a debit adjustment but would be

decreased by a credit adjustment. Therefore, for supplies, $3,600 – 1,050 = 2,550

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 3,600 b) 1,050 2,550

Prepaid insurance 2,400 a) 100 2,300

Furniture 6,000 6,000

Accumulated amortization, furniture c) 200 200

Accounts payable 200 200


Notes Payable 6,000




g) 1,800

Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300








Totals 3,505 3,505




Helpful Hint #3

Similarly, if an account has a credit balance on the

unadjusted trial balance, it will have a credit balance

on the adjusted trial balance as well.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 3,600 b) 1,050 2,550





Unearned consulting revenue 3,000 d) 250 2,750

Notes Payable 6,000




g) 1,800

Rental revenue 300


Rent expense 1,000


Totals 23,300 23,300








Totals 3,505 3,505




Helpful Hint #4

When an account has a credit balance on the unadjusted trial balance, it will be decreased by a debit adjustment and increased by a credit adjustment. For

unearned consulting revenue, $3,000 - 250 = $2,750

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 3,600 b) 1,050 2,550






Notes Payable 6,000 6,000

Carol Finlay, capital 10,000 10,000

Carol Finlay, withdrawals 600 600

Consulting revenue 3,800 d) 250 5,850

g) 1,800

Rental revenue 300 300

Salaries expense 1,400 f) 70 1,470

Rent expense 1,000 1,000

Utilities expense 230 230

Totals 23,300 23,300

Insurance expense a) 100 100

Supplies expense b) 1,050 1,050

Amortization expense, furniture c) 200 200

Salaries payable f) 70 70

Interest expense e) 35 35

Interest payable e) 35 35

Accounts receivable g) 1,800 1,800

Totals 3,505 3,505



Helpful Hint #5

If a new account was added because of adjusting entries, then

the adjusted trial balance will equal the amount of the debit or credit entered in the adjustments

column.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 3,600 b) 1,050 2,550









Consulting revenue 3,800 d) 250 5,850

g) 1,800


Salaries expense 1,400 f) 70 1,470



Totals 23,300 23,300

Insurance expense a) 100 100

Supplies expense b) 1,050 1,050

Amortization expense, furniture c) 200 200

Salaries payable f) 70 70

Interest expense e) 35 35

Interest payable e) 35 35

Accounts receivable g) 1,800 1,800

Totals 3,505 3,505 25,405 25,405




Helpful Hint #6

Don’t forget to add all the debits in the debit column of the adjusted trial balance and make sure they

are equal to all of the credits in the credit column. As always,

Dr = Cr

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 2,550


Furniture 6,000

Accumulated amortization, furniture 200



Notes Payable 6,000




Rental revenue 300


Rent expense 1,000


Insurance expense 100

Supplies expense 1,050

Amortization expense, furniture 200

Salaries payable 70

Interest expense 35

Interest payable 35

Accounts receivable 1,800

Totals 25,405 25,405



Income Statement Balance SheetAdjusted Trial Balance

Step 4

Complete the worksheet.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 2,550


Furniture 6,000




Notes Payable 6,000




Rental revenue 300


Rent expense 1,000





Salaries payable 70

Interest expense 35

Interest payable 35


Totals 25,405 25,405




Helpful Hint #7

Once the adjusted trial balance columns are in balance, you can ignore the

previous four columns. Only the balance from the adjusted trial balance column will be entered in ONE of the last four

columns.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 2,550


Furniture 6,000




Notes Payable 6,000



Consulting revenue 5,850 5,850



Rent expense 1,000





Salaries payable 70

Interest expense 35

Interest payable 35


Totals 25,405 25,405



Income Statement Balance SheetAdjusted Trial BalanceHelpful Hint #8

The income statement columns will only have income statement accounts in them (i.e. revenues and expenses). Revenues have

credit balances and will therefore be entered in the credit columns.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070

Supplies 2,550


Furniture 6,000




Notes Payable 6,000





Salaries expense 1,470 1,610



Insurance expense 100 100

Supplies expense 1,050 1,050

Amortization expense, furniture 200 200

Salaries payable 70

Interest expense 35 35

Interest payable 35


Totals 25,405 25,405



Income Statement Balance SheetAdjusted Trial BalanceHelpful Hint #9

Expenses have debit balances and will

therefore be entered in the debit columns.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 2,550 2,550

Prepaid insurance 2,300 2,300





Notes Payable 6,000








Totals




Salaries payable 70


Interest payable 35

Accounts receivable 1,800 1,800

Totals 25,405 25,405




Helpful Hint #10

The balance sheet columns contain assets, liabilities, capital and withdrawals. A debit from the adjusted trial balance is

recorded in the debit column of the balance sheet.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070




Accumulated amortization, furniture 200 200


Unearned consulting revenue 2,750 2,750












Salaries payable 70 70


Interest payable 35 35


Totals 25,405 25,405




Helpful Hint #11

A credit from the adjusted trial balance is recorded in the credit column of the balance

sheet.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070






















Totals 25,405 25,405 4,085 6,150 21,320 19,255




Total each of the four columns. The debits will not

be equal to the credits.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070






















Totals 25,405 25,405 4,085 6,150 21,320 19,255

Net income 2,065




Step 5

Calculate net income (loss) by subtracting the debits (expenses) from the revenues (credits).

This amount should be entered under the smaller of the two totals. In this case,

$6,150 – 4,085 = 2,065. This number will be put in the debit column.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070






















Totals 25,405 25,405 4,085 6,150 21,320 19,255

Net income 2,065 2,065




Helpful Hint #12

Since net income was entered in the debit column of the income

statements, it will also be entered in the balance sheet. This time, as a credit, since

Dr = Cr

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070












Salaries expense 1,470 170










Totals 25,405 25,405 2,785 6,150 21,320 19,255

Net income 3,365 2,065 Totals 6,150 6,150 21,320 21,320




Helpful Hint #13

Now, the last check of the worksheet is to total the income

statement and balance sheet columns again. If you have completed the worksheet

correctly: Dr = Cr

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 200 200





















Totals 21,755 21,755 4,085 2,500 17,670 19,255

Net loss 1,585 1,585Totals 4,085 4,085 19,255 19,255




Helpful Hint #14

Now, how do we complete this section of the work sheet in the

case of a net loss? To demonstrate, assume instead

that total expenses were 4,085 and revenues were 2,500.

Account

Dr Cr Dr Cr Dr Cr

Cash 8,070 8,070

Supplies 200 200





















Totals 21,755 21,755 4,085 2,500 17,670 19,255

Net loss 1,585 1,585Totals 4,085 4,085 19,255 19,255




Helpful Hint #15

Under this assumption, the difference between revenues

and expenses equals a net loss of 1,585. This amount should be entered under the smaller of the two totals. Enter 1,585 in

the credit column of the income statement and the debit column

of the balance sheet.

the heading should identify the entity, the document and the time period

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