CHAPTER 6
WORK SHEET FOR A
SERVICE BUSINESS
2
6-1 CREATING A WORK SHEET
Fiscal Period: The length of time for which a business
summarizes and reports financial information.
1 Month, 6 Months, 1 Year
Business can choose length which suit their needs. Period can
be any date, though most businesses begin on the first day
of the month.
Work Sheet: A columnar accounting form used to
summarize the general ledger information needed to
prepare financial statements.
3
PREPARING THE HEADING OF A WORK SHEET
page 153
1 Name of
Company
2 Name of
Report
3 Date of
Report
Trial Balance: A proof of the equality of debits and credits
in the general ledger.
-Account titles listed in the same order as chart of accounts.
-All accounts are listed even if they do not have a balance.
4
PREPARING A TRIAL BALANCE ON A WORK SHEET
page 154
2 1. Write the general ledger
account titles.
2. Write the general ledger
debit account balances.
Write the general ledger
credit account balances.
3. Rule a single line across the
two Trial Balance columns.
1 4 4. Add both the Trial Balance
Debit and Credit columns.
5. Write each column’s total
below the single line.
3
6. Rule double lines across
5 6 both Trial Balance columns.
6-2 PLANNING ADJUSTING ENTRIES
ON A WORK SHEET
Adjustments: Changes recorded on a work sheet to update
general ledger accounts at the end of a fiscal period.
-Assets like supplies and prepaid insurance are used to earn revenue.
-What we have actually used to earn revenue become expenses.
-We use the work sheet to plan adjustments
4 Questions we ask when analyzing adjustments:
1. What is the balance?
2. What should the balance be?
3. What must be done to correct the account balance?
4. What adjustment is made?
Look at pages 158-159
6
SUPPLIES ADJUSTMENT ON A WORK SHEET
page 158
3 2
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
7
PREPAID INSURANCE ADJUSTMENT
ON A WORK SHEET page 159
3 2
1. Write the debit amount.
2. Write the credit amount.
3. Label the two parts of this adjustment.
8
PROVING THE ADJUSTMENTS
COLUMNS OF A WORK SHEET page 160
1. Rule a single line.
2. Add both the Adjustments Debit and Credit columns. 3
Write each column’s total.
3. Rule double lines.
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PREPARING A WORK SHEET
page 160 C
1. Write the heading.
2. Record the trial balance.
3. Record the supplies adjustment.
4. Record the prepaid insurance adjustment.
5. Prove the Adjustments columns.
6. Extend all balance sheet account balances.
7. Extend all income statement account balances.
8. Calculate and record the net income (or net loss).
9. Total and rule the Income Statement and Balance Sheet
columns.
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1
2
496400 496400
10000 10000
15000 15000
10000 6 10000
102500 (a)
71500 31000
120000 (b)
10000 110000
20000 20000
5000 5000
500000 3 500000
62500 4 62500
356500 356500
21300 21300
(b)
10000 10000
2800 2800 7
30000 30000
(a)
71500 71500
11000
5 11000
881500 881500 81500 81500 146600 356500 734900 525000
Net Income 8 209900 209900
356500 356500 734900 734900
9
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6-3 EXTENDING BALANCE SHEET ACCOUNT
BALANCES ON A WORK SHEET page 162
At the end of each fiscal period, TechKnow prepares two financial statements from
information on the worksheet.
Balance Sheet: Reports assets, liabilities, and owner’s equity on a SPECIFIC Date.
1. Debit balances without adjustments
1 3
2. Debit balances with adjustments 3. Credit balances without adjustments
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EXTENDING INCOME STATEMENT ACCOUNT
BALANCES ON A WORK SHEET page 163
Income Statement: A financial statement showing revenue and
expenses for fiscal period called an income statement.
1. Sales balance
3
2. Expense balances without adjustments
3. Expense balances with adjustments
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RECORDING NET INCOME, AND TOTALING
AND RULING A WORK SHEET page 164
Revenue > Expenses = Net Income
4 1 2
7 5
1. Single rule
3 6
2. Totals 4. Extend net income 6. Totals
3. Net income 5. Single rule 7. Double rule
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CALCULATING AND RECORDING A NET
LOSS ON A WORK SHEET page 165
Expenses > Revenue = Net Loss
1. Single rule 4 2
2. Totals
3. Net loss
4. Extend net loss
