m中山大學管捏學院 经m00 BUSINESS SUN YAT-SEN UNIVERSIT Lesson Completing the Accounting Cycle M ask Team of NJDAWIWMIL ACOJAVNAVA School of Business, Sum Yatagen University
Lesson 5 Completing the Accounting Cycle Task Team of FUNDAMETAL ACCOUNTING School of Business, Sun Yat-sen University
Outline Q Describe the preparation of adjusted trial balance Describe and prepare a worksheet and describe its usefulness Describe the closing process and explain why temporary accounts are closed each period. Prepare closing entries Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity
2 Outline ⧫ Describe the preparation of adjusted trial balance ⧫ Describe and prepare a worksheet and describe its usefulness. ⧫ Describe the closing process and explain why temporary accounts are closed each period. ⧫ Prepare closing entries
Accounting Cycle 2 3. Post Journalize 1. Analyze Transactions 4. Unadjusted trial balance Start the 8. Close next cycle 5. Adjust 7. Prepare finance 6. Adjusted statements trial balance Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 3
3 Accounting Cycle 1.Analyze Transactions 2. Journalize 3. Post 4. Unadjusted trial balance 5. Adjust 6. Adjusted trial balance 7. Prepare finance statements 8.Close Start the next cycle
What we have done? A So far we have discussed the following steps in the accounting cycle: D Analyzing D Recording D Posting n Unadjusted trial balance Lets start n Adjusting from the worksheet n Adjusted trial balance Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity
4 What We Have Done? ⧫So far we have discussed the following steps in the accounting cycle: Analyzing Recording Posting Unadjusted trial balance Adjusting Adjusted trial balance Let’s start from the worksheet
What are on the worksheet? o A worksheet includes following columns n Unadjusted trial balance. n Adjusting entries o Adjusted trial balance income statement 囗 Balance sheet Worksheet can be used to simplify the preparation of financial statements Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 5
5 What are on the Worksheet? ⧫ A worksheet includes following columns: Unadjusted trial balance. Adjusting entries Adjusted trial balance. income statement Balance sheet ⧫ Worksheet can be used to simplify the preparation of financial statements
A Blank Worksheet Smith linc Work Sheet For Year ended Dec 31 2004 Unadjusted Trial Adjusted Trial Balance sheet and Balance Adjustments Balance Income Statement Statement of Owner Account Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 6
6 A Blank Worksheet
Steps in preparation of the worksheet mith ine Work Sheet For Year ended dec31 2004 Unadjusted Trial Balance Adjus tments Adjusted Trial Balance Income State me nt State me nt of Owner's Account Equity 171000 Short-term investment Inte rest re ceva ble Pre paid Expense Plant and er Accumulated De pre ciation Step 1: Une armed Revenue 50000 Enter the accounts and 36000 unadjusted trial balance Cost of sales total 636000636000 Task Team of fundamentalaccounting Business sehool. Sun Yaf sen University 7
7 Steps in preparation of the worksheet Account Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr Cash 171000 Short-term investment 100000 Accounts Receivable 36000 Interest receivable Prepaid Expense 20000 Inventory 20000 Plant and Equipmemt 250000 Accumulated Depreciation Accounts Payable 50000 Wages payable Unearned Revenue 50000 Paid Capital 500000 Sales Revenue 36000 Interest Revenue Cost of Sales 30000 Operating expenses 9000 total 636000 636000 Smith Inc. Work Sheet For Year ended Dec.31 2004 Balance Sheet and Statement of Owner's Equity Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Step 1: Enter the accounts and unadjusted trial balance
Steps in preparation of the worksheet Smith ine Work Sheet For Year ended Dec31 2004 Balance sheet and Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Statement of Owner Account 100000 Accounts Receivable Interest receivable 916.67 Pre paid Expense 10000 Plant and Equipmemt Accumulated De preciation 2600 Step2: 25000.00 Entry the‖xm adjusting 2916.67 entries 47600.00 636000 75516.6775516.67 Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 8
8 Steps in preparation of the worksheet Account Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr Cash 171000 Short-term investment 100000 Accounts Receivable 36000 Interest receivable 2916.67 Prepaid Expense 20000 10000 Inventory 20000 Plant and Equipmemt 250000 Accumulated Depreciation 2600 Accounts Payable 50000 Wages payable 35000 Unearned Revenue 50000 25000.00 Paid Capital 500000 Sales Revenue 36000 25000 Interest Revenue 2916.67 Cost of Sales 30000 Operating expenses 9000 47600.00 total 636000 636000 75516.67 75516.67 Smith Inc. Work Sheet For Year ended Dec.31 2004 Balance Sheet and Statement of Owner's Equity Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Step2: Entry the adjusting entries’
Steps in preparation of the worksheet Work Sheet For Year ended Dec 31 2004 Unadjusted Trial Adjusted Trial Income Statement Balance sheet and Account Adjustments Balance Balance State ment of owners Cr Cr Cr Short-term investme nt 100000 100000 Accounts receivable 36000 6000 Inte rest receivable 2916.6 2916.67 Pre paid Expense 20000 10001000 Inventory 20000 Plant and equipme mt 250000 Accumulated De precoat Step3: 2600 Accounts Payabl Entry the 50000 Wages payable adjusted 35000 35000 Une armed Revenue 25000.00 trial balance Paid capital 500000 Sales revenue 25000 2916.67 2916.67 Cost of sales 30000 30000 Operating expenses 9000 47600.00 56600.00 6360001636000175516.67755667]676516.67676516.67 Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 9
9 Steps in preparation of the worksheet Account Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr Cash 171000 171000 Short-term investment 100000 100000 Accounts Receivable 36000 36000 Interest receivable 2916.67 2916.67 Prepaid Expense 20000 10000 10000 Inventory 20000 20000 Plant and Equipmemt 250000 250000 Accumulated Depreciation 2600 2600 Accounts Payable 50000 50000 Wages payable 35000 35000 Unearned Revenue 50000 25000.00 25000.00 Paid Capital 500000 500000 Sales Revenue 36000 25000 61000 Interest Revenue 2916.67 2916.67 Cost of Sales 30000 30000 Operating expenses 9000 47600.00 56600.00 total 636000 636000 75516.67 75516.67 676516.67 676516.67 Smith Inc. Work Sheet For Year ended Dec.31 2004 Balance Sheet and Statement of Owner's Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Step3: Entry the adjusted trial balance
Steps in preparation of the worksheet Smith nc. Work Sheet For Year ended dec31 2004 Unadjusted Trial Balance sheet and Adjustments Adjusted Trial Income State me nt Account Balance Balance State ment of owner’s 171000 171000 Short-term investment l00000 Accounts receivable 36000 Interest receivable 2916.67 2916.67 Pre paid Expense 0000 Inventory Plant and equipme Step4: ccumulated Depreciation Entry Adjusted Amounts to wages payable Une amed Revenue Income statement Paid Capital Columns Sales revenue 3600 61000 61,000 Interest revenue 2916.67 2916.67 2,917 Cost of sales 30000 perating expenses 56600.00 total 636000063600075516677551667676516.67676516.67 63917 Net Incc (22683) Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 10
10 Steps in preparation of the worksheet Account Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr Cash 171000 171000 Short-term investment 100000 100000 Accounts Receivable 36000 36000 Interest receivable 2916.67 2916.67 Prepaid Expense 20000 10000 10000 Inventory 20000 20000 Plant and Equipmemt 250000 250000 Accumulated Depreciation 2600 2600 Accounts Payable 50000 50000 Wages payable 35000 35000 Unearned Revenue 50000 25000.00 25000.00 Paid Capital 500000 500000 Sales Revenue 36000 25000 61000 61,000 Interest Revenue 2916.67 2916.67 2,917 Cost of Sales 30000 30000 30,000 Operating expenses 9000 47600.00 56600.00 56,600 total 636000 636000 75516.67 75516.67 676516.67 676516.67 86,600 63,917 Net Income (22,683) Smith Inc. Work Sheet For Year ended Dec.31 2004 Balance Sheet and Statement of Owner's Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Step4: Entry Adjusted Amounts to Income Statement Columns
