10 column worksheet is prepared by companies which got more adjusting entries at year end. It shows income statement and balance sheet in worksheet in simplified form.
Step 1 - Recording unadjusted trial balance. Trial balance is prepared by posting the balance of each accounts after all transaction entries (Before adjustments & closing) for period ended has been posted in each accounts.
Step 2 - Making adjusting entries. Adjusting entry is posted at year end. Adjusting entries are made for expired expenses which we prepaid, depreciation expenses for plant and machinery's, earned revenue which we received in advance for the service to be performed, any expenses to be payable, any revenue which has to be receivable etc.
Step 3 - Adjusted trial balance. Calculating up to date trial balance including adjustments.
Step 4 - Income statement. Only revenue and expenses are posted in income statement column from adjusted trial balance.
Revenue > expenses, Difference should be in debit column (i.e Net income)
Expenses > revenue, Difference should be in credit column (i.e Net loss)
Step 5 - Balance sheet. Assets, liabilities and equity should come in balance sheet from adjusted trial balance.
To equal the balance sheet, net income should be carried forward to credit side and if it is net loss, it should be carried forward to debit side of balance sheet.
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Click here for free worksheet template
Step 1 - Recording unadjusted trial balance. Trial balance is prepared by posting the balance of each accounts after all transaction entries (Before adjustments & closing) for period ended has been posted in each accounts.
Step 2 - Making adjusting entries. Adjusting entry is posted at year end. Adjusting entries are made for expired expenses which we prepaid, depreciation expenses for plant and machinery's, earned revenue which we received in advance for the service to be performed, any expenses to be payable, any revenue which has to be receivable etc.
Step 3 - Adjusted trial balance. Calculating up to date trial balance including adjustments.
Step 4 - Income statement. Only revenue and expenses are posted in income statement column from adjusted trial balance.
Revenue > expenses, Difference should be in debit column (i.e Net income)
Expenses > revenue, Difference should be in credit column (i.e Net loss)
Step 5 - Balance sheet. Assets, liabilities and equity should come in balance sheet from adjusted trial balance.
To equal the balance sheet, net income should be carried forward to credit side and if it is net loss, it should be carried forward to debit side of balance sheet.
If this tutorial was helpful, please leave your comment.
Click here for free worksheet template
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