LO 4.7 Use a 10-column worksheet (optional step in the accounting ... - Free Printable

Let’s go step by step to understand what’s happening in this worksheet and how the numbers are calculated.

We’re looking at a worksheet for Frank Investment Advisers for December 2016. It shows:

- Trial Balance (original account balances)
- Adjustments (changes made at end of month)
- Adjusted Trial Balance (after adjustments)
- Income Statement columns (revenues and expenses)
- Balance Sheet columns (assets, liabilities, equity)

The key is that adjustments change some accounts, and then we move the adjusted amounts into either the Income Statement or Balance Sheet columns — depending on whether they’re revenue/expense (Income Statement) or asset/liability/equity (Balance Sheet).

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Step 1: Understand the Adjustments

There are four labeled adjustments: (a), (b), (c), (d)

#### Adjustment (a): Unearned Revenue → Service Revenue
- Debit Unearned Revenue $100
- Credit Service Revenue $100
→ This means $100 of previously unearned revenue is now earned.

So:
- Unearned Revenue goes from $2,000 → $1,900 (credit side reduced by $100)
- Service Revenue goes from $55,000 → $55,100 (credit side increased by $100)

✔ Matches worksheet.

#### Adjustment (b): Office Supplies → Supplies Expense
- Debit Supplies Expense $1,000
- Credit Office Supplies $1,000
→ We used up $1,000 worth of supplies.

So:
- Office Supplies: $5,000 - $1,000 = $4,000 (debit)
- Supplies Expense: $0 + $1,000 = $1,000 (debit)

✔ Matches worksheet.

#### Adjustment (c): Depreciation
- Debit Depreciation Expense-Equipment $2,800
- Credit Accumulated Depreciation-Equipment $2,800
→ Recording depreciation for the month.

So:
- Accumulated Depreciation: $14,000 + $2,800 = $16,800 (credit)
- Depreciation Expense: $0 + $2,800 = $2,800 (debit)

✔ Matches worksheet.

#### Adjustment (d): Accrued Salaries
- Debit Salaries Expense $2,000
- Credit Salaries Payable $2,000
→ Salaries owed but not yet paid.

So:
- Salaries Expense: $35,000 + $2,000 = $37,000 (debit)
- Salaries Payable: $0 + $2,000 = $2,000 (credit)

✔ Matches worksheet.

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Step 2: Check Adjusted Trial Balance Totals

After adjustments, total debits and credits should still be equal.

Original Trial Balance:
Debit = $177,000
Credit = $177,000

Adjustments:
Total Debits = $100 (a) + $1,000 (b) + $2,800 (c) + $2,000 (d) = $5,900
Total Credits = same = $5,900

Adjusted Trial Balance:
Debit = $177,000 + $5,900 = $182,900? Wait — no!

Wait — let’s check actual Adjusted Trial Balance totals given:

In the table, Adjusted Trial Balance Debit = $181,800
Credit = $181,800

But original was $177,000 each, plus $5,900 adjustments → should be $182,900?

That doesn’t match. Let’s recalculate carefully.

Actually — look again: The “Trial Balance” column already includes all original balances. Then adjustments are added/subtracted to get “Adjusted Trial”.

Let’s verify one account: Cash — unchanged → $28,000 debit → correct.

Accounts Receivable — unchanged → $46,000 → correct.

Office Supplies: $5,000 - $1,000 credit adjustment → $4,000 → correct.

Equipment: unchanged → $28,000 → correct.

Accumulated Depreciation: $14,000 + $2,800 = $16,800 → correct.

Salaries Payable: $0 + $2,000 = $2,000 → correct.

Unearned Revenue: $2,000 - $100 = $1,900 → correct.

Service Revenue: $55,000 + $100 = $55,100 → correct.

Salaries Expense: $35,000 + $2,000 = $37,000 → correct.

Supplies Expense: $0 + $1,000 = $1,000 → correct.

Depreciation Expense: $0 + $2,800 = $2,800 → correct.

Now sum all Adjusted Trial Balance Debits:

Cash: 28,000
AR: 46,000
Office Supplies: 4,000
Equipment: 28,000
Dividends: 20,000
Insurance Exp: 3,000
Salaries Exp: 37,000
Supplies Exp: 1,000
Interest Exp: 4,000
Rent Exp: 8,000
Depreciation Exp: 2,800
= Let’s add:

28k + 46k = 74k
+4k = 78k
+28k = 106k
+20k = 126k
+3k = 129k
+37k = 166k
+1k = 167k
+4k = 171k
+8k = 179k
+2.8k = 181,800 ✔

Credits:

Accum Dep: 16,800
AP: 16,000
Salaries Payable: 2,000
Unearned Rev: 1,900
Notes Payable: 23,000
Common Stock: 15,000
Retained Earnings: 52,000
Service Revenue: 55,100
= Add:

16,800 + 16,000 = 32,800
+2,000 = 34,800
+1,900 = 36,700
+23,000 = 59,700
+15,000 = 74,700
+52,000 = 126,700
+55,100 = 181,800 ✔

Perfect — Adjusted Trial Balance balances.

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Step 3: Move to Income Statement and Balance Sheet Columns

Rules:

- Income Statement: All revenues and expenses go here.
- Balance Sheet: Assets, Liabilities, Equity (including Dividends and Retained Earnings) go here.

Note: Dividends are NOT an expense — they reduce equity, so they go to Balance Sheet (as a reduction of retained earnings).

Let’s list which accounts go where:

#### Income Statement (Debit = Expenses, Credit = Revenues)

Expenses (Debit):
- Insurance Expense: 3,000
- Salaries Expense: 37,000
- Supplies Expense: 1,000
- Interest Expense: 4,000
- Rent Expense: 8,000
- Depreciation Expense: 2,800
→ Total Expenses = 3k + 37k + 1k + 4k + 8k + 2.8k = 55,800

Revenues (Credit):
- Service Revenue: 55,100
→ Total Revenues = 55,100

Net Loss = Expenses - Revenues = 55,800 - 55,100 = $700 loss

This net loss will reduce Retained Earnings on the Balance Sheet.

#### Balance Sheet

Assets (Debit):
- Cash: 28,000
- Accounts Receivable: 46,000
- Office Supplies: 4,000
- Equipment: 28,000
→ Total Assets = 28k + 46k + 4k + 28k = 106,000

Liabilities (Credit):
- Accounts Payable: 16,000
- Salaries Payable: 2,000
- Unearned Revenue: 1,900
- Notes Payable (Long Term): 23,000
→ Total Liabilities = 16k + 2k + 1.9k + 23k = 42,900

Equity (Credit):
- Common Stock: 15,000
- Retained Earnings: 52,000
- Less: Dividends: 20,000 (this is a contra-equity, so it reduces equity)
- Less: Net Loss: 700 (also reduces equity)

Wait — in the worksheet, Dividends is shown as a debit in Balance Sheet column ($20,000), which is correct because it reduces equity.

And Retained Earnings starts at $52,000, but we need to adjust for net loss and dividends.

However, in the worksheet, the Balance Sheet columns show:

Debit total: 126,000
Credit total: 126,700

Difference = 700 → which is the net loss. That makes sense — because net loss reduces equity, so credit side is higher by 700 until we close the books.

Let’s verify Balance Sheet totals as per worksheet:

Debit side (Assets + Dividends):

Cash: 28,000
AR: 46,000
Office Supplies: 4,000
Equipment: 28,000
Dividends: 20,000
→ Total Debit = 28+46+4+28+20 = 126,000 ✔

Credit side (Liabilities + Equity):

AP: 16,000
Salaries Payable: 2,000
Unearned Rev: 1,900
Notes Payable: 23,000
Common Stock: 15,000
Retained Earnings: 52,000
→ Total Credit = 16k + 2k + 1.9k + 23k + 15k + 52k = let's compute:

16+2=18; +1.9=19.9; +23=42.9; +15=57.9; +52=109.9? Wait — that’s only 109,900? But worksheet says 126,700.

I think I missed something.

Wait — look back at the worksheet:

Under Balance Sheet Credit column:

- Accumulated Depreciation-Equipment: 16,800 ← this is a contra-asset, but it’s listed under Credit in Balance Sheet — which is correct because it reduces assets, but in worksheet format, it’s placed in credit column of Balance Sheet.

Ah! I forgot Accumulated Depreciation!

In Balance Sheet Credit column, we have:

- Accumulated Depreciation-Equipment: 16,800
- Accounts Payable: 16,000
- Salaries Payable: 2,000
- Unearned Revenue: 1,900
- Notes Payable: 23,000
- Common Stock: 15,000
- Retained Earnings: 52,000

Now add them:

16,800 (Accum Dep)
+16,000 = 32,800
+2,000 = 34,800
+1,900 = 36,700
+23,000 = 59,700
+15,000 = 74,700
+52,000 = 126,700 ✔

Yes! And Debit side was 126,000.

Difference = 126,700 - 126,000 = 700 → which is the net loss (since expenses > revenues by 700). In closing entries, this 700 would be transferred to Retained Earnings to reduce it.

So everything checks out.

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Final Answer:

The worksheet is correctly completed. The net loss for the month is $700, which explains why the Balance Sheet credit total exceeds the debit total by $700. All adjustments are properly recorded, and the Adjusted Trial Balance totals match at $181,800 for both debits and credits.

Final Answer:
The worksheet is accurate with a net loss of $700 for the month.