AccountingPrinciplesCompletingtheAccountingCycle幻灯片.pptxVIP

;;Multiple-column form used in preparing financial statements. Not a permanent accounting record. May be a computerized worksheet using an electronic spreadsheet program such as Excel. Prepared using a five step process. Use of worksheet is optional.;;;Illustration 3-23 General journal showing adjusting entries;;;;;Preparing Statements from a Worksheet;LO 1;Adjusting entries are prepared from the adjustments columns of the worksheet. Journalizing and posting of adjusting entries follows the preparation of financial statements when a worksheet is used.;Susan Elbe is preparing a worksheet. Explain to Susan how she should extend the following adjusted trial balance accounts to the financial statement columns of the worksheet.;At the end of the accounting period, the company makes the accounts ready for the next period.;Closing entries formally recognize in the ledger the transfer of net income (or net loss) and owner’s drawings to owner’s capital.;Owner’s Capital is a permanent account. All other accounts are temporary accounts.;CLOSING ENTRIES ILLUSTRATED;Illustration 4-11;;Purpose is to prove the equality of the permanent account balances carried forward into the next accounting period. ;The worksheet for Hancock Company shows the following in the financial statement columns: Owner’s Drawings $15,000 Owner’s Capital $42,000 Net income $18,000 Prepare the closing entries at December 31 that affect owner’s capital.;;Unnecessary if accounting records are free of errors. Made whenever an error is discovered. Must be posted before closing entries. Instead of preparing a correcting entry, it is possible to reverse the incorrect entry and then prepare the correct entry.;CASE 1: On May 10, Mercato Co. journalized and posted a $50 cash collection on account from a customer as a debit to Cash $50 and a credit to Service Revenue $50. The company discovered the error on May 20, when the customer paid the remaining balance in full.;CASE 2: On May 18, Mercato purchased