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CHAPTER 5PREPARATION OF FINANCIAL STATEMENTSIFRS Principles of Accounting with Key Words in Korean Soon Suk Yoon ? Hyo Jin KimPowerPoint Presentation by:Soon Suk Yoon, Professor, Chonnam National UniversityHyo Jin Kim, Assistant Professor, Jeonju University 2010Objective 1Worksheet for a service-oriented businessworksheetA key means of avoiding errors is the preparation of an informal schedule called a worksheet (???) at the end of the reporting period. The worksheet is not a permanent accounting record but rather is used to put the detailed accounting data in one place, and hence to save time and effort in correcting errors.The columns of a typical worksheetappear in the following order:Trial Balance,Adjustments,Income Statement, and Balance Sheet.Example 5-1Adjusting Entries for a Service CompanyJiffy Service CorporationTrial BalanceDecember 31, 20×4CashAccounts ReceivableSuppliesPrepaid InsuranceMachineryAccumulated DepreciationAccounts PayableNotes PayableUnearned Service FeesCapital StockRetained EarningsService FeesSalary ExpenseTelephone Expense$6,00012,0005002,00010,0005,0002,500$3,0004,0002,0001,00010,0003,00015,000$38,000$38,000Adjusting Entries? Supplies. A count of supplies at year’s end revealed that $200 was on hand. Since the beginning balance was $500, $300 must have been used and thus represents the supplies expense for the period. Because no supply expense account exists, one must be established on the next available line of the worksheet. The adjusting entry is：Dr. Supplies Expense 300 Cr. Supplies 300Adjusting Entries? Insurance. Prepaid insurance of $2,000 at the beginning of the year was for a two-year policy commencing January 1, 20×4. Thus, the amount of insurance expense for 20×4 is $1,000 ($2,000/2 years). Since no account for insurance expense exists, one must be set up. The adjusting entry is： Dr. Insurance Expense 1,000 Cr. Prepaid Insurance 1,000Adjusting Entries? Depreciation. The machine was acquired on J