Bookkeeping 16. Worksheet Flashcards
How do you begin work on the WORKSHEET?
You copy the TRIAL BALANCE data into columns 1 & 2.
Why are the FIRST two columns labeled UNADJUSTED TRIAL BALANCE?
Because some balances are incorrect because ADJUSTMENTS must be made to update some figures.
What is the SECOND step in preparing the WORKSHEET?
Suppose you started the month with $2,200 worth of office supplies, and now you only have $1,200. You enter this $1.000 decrease in office supplies in the appropriate line in columns 3 and 4. In this case, a Cr to OFFICE SUPPLIES and a Dr to OFFICE SUPPLY EXPENSE.
What is the effect of making the Office Supplies entry in the ADJUSTMENTS column?
That entry will eventually be shown on the OPERATING STATEMENT as an OFFICE SUPPLIES EXPENSE.
How is the OFFICE SUPPLIES ACCOUNT adjustment made?
TWO ENTRIES MUST BE MADE: Cr to OFFICE SUPPLIES: $1.000, and a Dr OFFICE SUPPLIES EXPENSE, $1,000
Why were two entries made for the OFFICE SUPPLIES EXPENSE?
Because it is a transaction like any other transaction, and ALL TRANSACTIONS REQUIRE TWO ENTRIES.
What NOTATION must be made next to ALL ADJUSTING ENTRIES?
Each of the two (or more) entries must be labeled with, say, a letter (i.e.: (a)), so they can be matched up when the worksheet is read.
Explain the purpose of the Dr and Cr to the OFFICE SUPPLIES ACCOUNT:
- Dr OFFICE SUPPLIES EXPENSE for $1.000 shows there was an expense in office supplies.
- Cr to OFFICE SUPPLIES for $1,000 shows there has been a reduction in the Office Supplies ASSET.
What are the entries required for $400 rent that is due but has not yet been paid?
- Dr RENT EXPENSE, $400
- Cr ACCOUNTS PAYABLE (Rent Payable), $400
THIS IS AN ADJUSTING ENTRY, because the amount has NOT been paid but the EXPENSE has been incurred for the period in question.
Again, what must be noted next to the entry for RENT?
A label, such as (b), so those amounts can be paired up.
