1. the
ing le
let yc
mp g C
Co tin
un
r4
o
cc
pt e
A
ha
C
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

2. Learning Objectives
1.
2.
3.
4.
5.
6.
7.
Describe the flow of accounting information from the
unadjusted trial balance into the adjusted trial
balance and financial statements.
Prepare financial statements from adjusted account
balances.
Prepare closing entries.
Describe the accounting cycle.
Illustrate the accounting cycle for one period.
Explain what is meant by the fiscal year and the
natural business year.
Describe and illustrate the use of working capital and
the current ratio in evaluating a company’s financial
condition.

3. Lear
ning
Obje
ctive
Desc
infor ribe the
ma
flo
tr
rial b
w
t
alancion from of acco
bala
nce e into t the una unting
and
d
h
finan e adjus justed
t ed t
cial s
tatem rial
ents.
1
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

4. FLOW OF
ACCOUNTING
INFORMATION
(continued)

5. FLOW OF ACCOUNTING INFORMATION

6. Flow of Accounting Information
End-of-Period Spreadsheet (Work Sheet)
Unadjusted TB
Accounts
o
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Cr
Account balances are listed in the Unadjusted Trial
Balance columns using the ending balances found in
the general ledger.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

7. Flow of Accounting Information
End-of-Period Spreadsheet (Work Sheet)
Unadjusted TB
Accounts
o
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Cr
Adjustments are entered here. Two possibilities:
 Deferrals – Existing balances are changed
 Accruals – New information is entered
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

8. Flow of Accounting Information
End-of-Period Spreadsheet (Work Sheet)
Unadjusted TB
Accounts
Dr
Cr
Adjustments
Adjusted TB
Dr
Dr
Cr
Cr
o Adjustments are combined with the unadjusted
trial balance amounts to provide balances for the
Adjusted Trial Balance columns.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

9. Flow of Accounting Information
End-of-Period Spreadsheet (Work Sheet)
Adjusted TB
Accounts
o
Dr
Cr
Income State.
Dr
Cr
Balance Sheet
Dr
Cr
Revenue and expense balances in the Adjusted Trial
Balance columns are extended to the Income
Statement columns.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

10. Flow of Accounting Information
End-of-Period Spreadsheet (Work Sheet)
Adjusted TB
Accounts
o
Dr
Cr
Income State.
Dr
Cr
Balance Sheet
Dr
Cr
Asset, liability, and stockholders’ equity balances in
the Adjusted Trial Balance columns are extended to
the Balance Sheet columns.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

11. Lear
ning
Obje
Prep
ctive
are f
i nan
cia
a
l
adjus
ted a statemen
ccou
t
nt ba s from
lance
s.
2
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

12. Income Statement
o The income statement for NetSolutions is
prepared directly from the Income Statement
or Adjusted Trial Balance columns of the endof-period spreadsheet (work sheet) beginning
with fees earned of $16,840.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

13. INCOME
STATEMENT
to retained earnings statement

14. Retained Earnings Statement
o
The first item normally presented on the
retained earnings statement is the balance of
the Retained Earnings account at the
beginning of the period.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

15. RETAINED
EARNINGS
STATEMENT
from the income statement
to the balance sheet

16. Balance Sheet
o The balance sheet is prepared directly from
the Balance Sheet or Adjusted Trial Balance
columns of the end-of-period spreadsheet (or
work sheet), beginning with Cash of $2,065.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

17. BALANCE SHEET
from the retained earnings statement

18. Classified Balance Sheet
o
A classified balance sheet is a balance sheet
that was expanded by adding subsections for
(1) current assets; (2) property, plant, and
equipment; (3) current liabilities; and (4) longterm liabilities.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

19. CURRENT ASSETS
Cash and other
assets that are
expected to be
converted into cash,
sold, or used up
usually within a year
or less, through the
normal operations of
the business, are
called current
assets.
 Cash
 Accounts
Receivable
 Notes Receivable
 Supplies

20. Notes Receivable
o
Notes receivable are written promises by the
customer to pay the amount of the note and
possibly interest at an agreed rate.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

21. FIXED ASSETS
Property, plant, and
equipment (also
called fixed assets
or plant assets)
include assets that
depreciate over a
period of time. Land
is an exception,
since it is not subject
to depreciation.
 Equipment
 Machinery
 Buildings
 Land

22. CURRENT LIABILITIES
Liabilities that will
be due within a
short time (usually
one year or less)
and that are to be
paid out of current
assets are called
current liabilities.
 Accounts payable
 Wages payable
 Interest payable
 Unearned fees

23. LONG-TERM LIABILITIES
Liabilities not due
for a long time
(usually more than
one year) are called
long-term liabilities.
 Long-term notes
payable
 Mortgage
payable
 Bond payable

24. STOCKHOLDERS’ EQUITY
Stockholders’ equity is
the stockholders’ right
to the assets of the
business. It is presented
on the balance sheet
below the liabilities
section.
 Capital stock
 Retained
earnings

25. Lear
ning
Obje
ctive
Prep
are
e clo
sing
ent r i
es.
3
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

26. Closing Entries
o Accounts that are relatively permanent from
year to year are called permanent accounts or
real accounts. These accounts are carried
forward from year to year.
o Accounts that report amounts for only one
period are called temporary accounts or
nominal accounts. Temporary accounts are not
carried forward because they relate to only
one period.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

27. Closing Entries
o
To report amounts for only one period,
temporary accounts should have zero
balances at the beginning of the next period.
o
To achieve this, the revenue and expense
account balances are transferred to Income
Summary at the end of the period.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

28. Closing Entries
o
The balance of Income Summary (net income
or net loss) is then transferred to the Retained
Earnings account.
o
The balance of the Dividends account is also
transferred to the Retained Earnings account.
o
The entries that transfer these balances are
called closing entries.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

29. CLOSING
ENTRIES

30. Closing Entries
o Income Summary is a temporary account that
is only used during the closing process.
o At the end of the closing process, the Income
Summary account will have a zero balance.
o Closing entries are recorded in the journal and
dated as of the last date of the accounting
period.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

31. JOURNALIZING
AND POSTING
CLOSING
ENTRIES

32. JOURNALIZING
AND POSTING
CLOSING
ENTRIES

33. JOURNALIZING
AND POSTING
CLOSING
ENTRIES

34. JOURNALIZING
AND POSTING
CLOSING
ENTRIES

35. CLOSING
ENTRIES
Step 1
Step 2
Step 3
Step 4

36. Temporary Account Balances
o
After the closing entries are posted, all of the
temporary accounts have zero balances.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

37. LEDGER

38. LEDGER

39. LEDGER

40. LEDGER

41. Post-Closing Trial Balance
o
A post-closing trial balance is prepared after
the closing entries have been posted. The
purpose of the post-closing (after closing)
trial balance is to verify that the ledger is in
balance and ready for the next accounting
period.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

42. POST-CLOSING
TRIAL BALANCE

43. Lear
ning
Obje
ctive
Desc
r ibe
the a
ccou
nting
cycle
.
4
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

44. Accounting Cycle
o
The accounting process that begins with
analyzing and journalizing transactions and
ends with preparing the accounting records
for the next period’s transactions is called the
accounting cycle. There are ten steps in the
accounting cycle.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

45. ACCOUNTING
CYCLE

46. ACCOUNTING
CYCLE
to the financial
statements

47. ACCOUNTING
CYCLE
From the adjusted
trial balance

48. Lear
ning
Obje
Illust
ctive
rate
the a
cc
ou nt
ing c
ycle
fo
one
peri r
o d.
5
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

49. ACCOUNTIN
G CYCLE

50. ACCOUNTING
CYCLE

51. ACCOUNTING
CYCLE

52. UNADJUSTED
TRIAL BALANCE

53. END-OF-PERIOD
SPREADSHEET

54. ADJUSTING
ENTRIES

55. ADJUSTED TRIAL
BALANCE

56. INCOME
STATEMENT

57. RETAINED
EARNINGS
STATEMENT

58. BALANCE SHEET

59. CLOSING
ENTRIES

60. POST-CLOSING
TRIAL BALANCE

61. LEDGER

62. LEDGER

63. LEDGER

64. LEDGER

65. Lear
ning
Obje
Expl
ctive
ai n w
year
h
and at is m
eant
the n
by th
atura
e fisc
l bus
al
iness
year
.
6
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

66. Accounting Period
o The annual accounting period adopted by a
business is known as its fiscal year.
o When a business adopts a fiscal year that ends
when business activities have reached the
lowest point in its annual operation, such a
fiscal year is also called the natural business
year.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

67. ACCOUNTING
PERIOD

68. FINANCIAL
HISTORY OF A
BUSINESS

69. Lear
ning
Obje
Desc
ctive
r ibe
and
work
illu
in
ratio g capit strate t
h
al a n
in ev
d t he e u s e of
aluat
i ng a
curre
n
c om
f i nan
pany t
cial c
’s
o n di
t i on.
7
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

70. Working Capital and Current Ratio
o The ability to convert assets into cash is called
liquidity.
o The ability of a business to pay its debts is
called solvency.
o Working capital is the excess of the current
assets of a business over its current liabilities.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

71. Working Capital and Current Ratio
o NetSolutions’ working capital at the end of
2013 is $6,355 as computed below. This amount
of working capital implies that NetSolutions is
able to pay its current liabilities.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

72. Working Capital and Current Ratio
o The current ratio is another means of
expressing the relationship between current
assets and current liabilities. The current ratio
is computed by dividing current assets by
current liabilities.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

73. Working Capital and Current Ratio
o The current ratio for NetSolutions at the end of
2013 is 5.6, computed as follows:
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

74. dix
en iod
pp -Per
A -o f
et
nd adshe
E re
Sp
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

75. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
Adjusted
Trial Balance
Adjustments
Debit
Credit
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
900
4,000
360
25,000
16,340
4,275
1,600
The
unadjusted
trial balance
is checked
for equality.
985
800
455
42,600
42,600
75

76. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
Credit
Adjusted
Trial Balance
Debit
Credit
Supplies
needs
adjusting
900
4,000
360
25,000
16,340
4,275
1,600
985
800
455
42,600
42,600
76

77. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
Adjustments
Debit
2,065
2,220
2,000
2,400
20,000
1,800
Debit
Credit
(a) 1,240
(a) Cost of
supplies on
hand at
December 31
is $760.
900
4,000
Credit
Adjusted
Trial Balance
360
25,000
16,340
4,275
1,600
985
800
455
42,600
(a) 1,240
42,600
77

78. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
Adjustments
Debit
2,065
2,220
2,000
2,400
20,000
1,800
Debit
Credit
(a) 1,240
(b) 200
(b) The insurance
expense for
December is
$200 ($2,400 ÷
12).
900
4,000
Credit
Adjusted
Trial Balance
360
25,000
16,340
4,275
1,600
985
800
455
42,600
(a) 1,240
(b) 200
42,600
78

79. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
Adjusted
Trial Balance
Adjustments
Debit
2,065
2,220
2,000
2,400
20,000
1,800
Credit
360
25,000
(c)
120
16,340
(c)
4,275
1,600
985
800
455
42,600
Credit
(a) 1,240
(b) 200
900
4,000
Debit
120
(c) Rent
revenue
earned
during
December
was $120
($360 ÷ 3).
(a) 1,240
(b) 200
42,600
79

80. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
(d)
500
Credit
4,000
(c)
120
16,340
(d)
(c)
4,275
1,600
985
800
455
42,600
Debit
Credit
(a) 1,240
(b) 200
900
360
25,000
Adjusted
Trial Balance
(d) Fees accrued
at the end of
December,
but not
recorded,
totaled $500.
500
120
(a) 1,240
(b) 200
42,600
80

81. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
(d)
500
900
4,000
360
25,000
120
Credit
Debit
Credit
(a) 1,240
(b) 200
(e)
(d)
(c)
(e)
985
800
455
42,600
(c)
16,340
4,275
1,600
Adjusted
Trial Balance
(e) Wages
accrued, but
250
not paid, at
the end of
December
totaled $250.
500
120
250
(a) 1,240
(b) 200
42,600
81

82. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
(d)
500
4,000
(e)
Credit
50
(e)
250
(f) Depreciation
500
120
of office
equipment is
$50 for
December.
250
(f)
985
800
455
42,600
120
Debit
(a) 1,240
(b) 200
(d)
(c)
(c)
16,340
4,275
1,600
Credit
(f)
900
360
25,000
Adjusted
Trial Balance
50
(a) 1,240
(b) 200
42,600
82

83. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
(d)
500
4,000
985
800
455
(c)
120
16,340
4,275
1,600
Summed
42,600 42,600
and ruled
Credit
(e)
250
(f)
Debit
Credit
(a) 1,240
(b) 200
(f)
900
360
25,000
Adjusted
Trial Balance
50
(e)
250
(d)
(c)
500
120
50
(a) 1,240
(b) 200
2,360
2,360
83

84. Add/Subtract Adjustments
o
The next step is to add or subtract the
adjustments to (or from) the amounts found in
the Unadjusted Trial Balance columns and
enter the results in the Adjusted Trial Balance
columns.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

85. Unadjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
Credit
2,065
2,220
2,000
2,400
20,000
1,800
Adjustments
Debit
(d)
500
4,000
120
(a) 1,240
(b) 200
250
(d)
(c)
500
120
250
(f)
50
(a) 1,240
(b) 200
42,600
2,065
2,720
760
2,200
20,000
1,800
50
(e)
Debit
4,000
(e)
985
800
455
42,600
(c)
16,340
4,275
1,600
Credit
(f)
900
360
25,000
Adjusted
Trial Balance
2,360
2,360
4,525
1,600
50
985
2,040
200
455
43,400
Credit
50
900
250
240
25,000
16,840
120
43,400
85

86. Spreadsheet
o Preparing the work sheet as a spreadsheet
allows the computer to assist you in the
process. The spreadsheet illustrated in Exhibit
20 has been reproduced on the next slide.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

88. Extending Amounts to Statement Columns
o The next step is to extend amounts in the
Adjusted Trial Balance columns to the Income
Statement and Balance Sheet columns. Because
of space limitations, the unadjusted trial
balance and the adjustments columns have
been removed for the remainder of this slide
presentation.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

89. Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
2,065
2,720
760
2,200
20,000
1,800
4,000
4,525
1,600
50
985
2,040
200
455
43,400
Credit
Income Statement
Debit
Credit
43,400
Debit
2,065
2,720
760
2,200
20,000
1,800
50
900
250
240
25,000
16,840
120
Balance Sheet
4,525
1,600
50
985
2,040
200
455
16,840
120
4,000
Credit
50
900
250
240
25,000
89

90. Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Debit
2,065
2,720
760
2,200
20,000
1,800
4,000
4,525
1,600
50
985
2,040
200
455
43,400
Credit
Income Statement
Debit
Credit
43,400
Debit
2,065
2,720
760
2,200
20,000
1,800
50
900
250
240
25,000
16,840
120
Balance Sheet
4,525
1,600
50
985
2,040
200
455
9,855
16,840
120
16,960
4,000
33,545
Credit
50
900
250
240
25,000
26,440
The four columns are summed.
90

91. Determining Net Income (Net Loss)
Income Statement
9,855
7,105
16,960
o
Balance Sheet
16,960
33,545
16,960
33,545
26,440
7,105
33,545
Net Income
The difference between the Income Statement
column totals and Balance Sheet column totals is
net income (or net loss) for the period.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.

92. Adjusted
Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Office Equipment
Accumulated Depr.
Accounts Payable
Wages Payable
Unearned Rent
Capital Stock
Dividends
Fees Earned
Rent Revenue
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Miscellaneous Exp.
Net income
Debit
2,065
2,720
760
2,200
20,000
1,800
4,000
4,525
1,600
50
985
2,040
200
455
43,400
Credit
Income Statement
Debit
Credit
43,400
Debit
2,065
2,720
760
2,200
20,000
1,800
50
900
250
240
25,000
16,840
120
Balance Sheet
4,525
1,600
50
985
2,040
200
455
9,855
7,105
16,960
16,840
120
4,000
16,960
33,545
16,960
33,545
Credit
50
900
250
240
25,000
26,440
7,105
33,545
92

93. the
ing le
let yc
mp g C
Co tin
un
nd
o
cc
eE
A
Th
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.