The document outlines the process of preparing a worksheet for financial statement preparation, detailing steps from entering headings to calculating adjusted trial balances. It includes guidance on recording unadjusted trial balance data, making necessary adjustments, and determining net income or loss. The example provided illustrates an adjusted trial balance for Sanchai Tan Beauty Salon as of January 31, 2012, with total debits and credits balanced at 215,764.

1. PREPARING
WORKSHEET

2. Worksheet
is a working paper used to assist
preparation of financial statement.
It also becomes analysis paper of an
accountant showing data from
unadjusted trial balance to financial
statement

3. Preparing Worksheet
1.Enter the heading of worksheet at top most part of
worksheet.
2.Prepare and make the following column of worksheet.
Account
Titles
Unadjusted
Trial
Balance
Adjustments Adjusted
Trial
Balance
Income
Statement
Balance Sheet
Dr. Cr Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.

4. Preparing Worksheet
3. Copy the trial balance on the unadjusted trial balance
column which includes all the information such as the
account title and balances of trial balance.
4. Write in adjustment column all the information of
adjusting entries such as the account title, debit and credit
amount. In every adjusting entry entered in adjustment
column, write in parenthesis the corresponding index
number or letter. You may write below the unadjusted trial
balance all the accounts not found in the unadjusted trial
balance.

5. Preparing Worksheet
5. Calculate the total adjustments column.
6. Extend and combine all information of unadjusted trial
balance and adjustment column to adjusted trial balance. If
the amounts are both debit and both credit amount, you
may add both debit amount, and credit amount. Then,
extend the balances to debit column or credit column. And
if the amount is one debit and one credit, subtract both
amounts then extend to column which has a bigger
amount.

6. Preparing Worksheet
7. Add the debit and credit column of adjusted trial balance
to prove equality of debits and credits.
8. Extend all information of adjusted trial balance to
“Balance Sheet column and Income Statement column.
“All Assets, liabilities, and capital to the “Balance Sheet
column.” Then, the expense accounts are extended to the
“Income Statement columns.” Add the debits and credit
sides of “Balance Sheet and Income Statement column.”
Find the difference of the debit and credit column of
Income Statement. The results of the differences of both
columns should be equal, otherwise, an error or errors
have been committed.

7. Preparing Worksheet
9. Determine whether the Income Statement is net income
or net loss.
If the total of credit column total debit column, the
result is net income.
If the total of credit column total debit column, the
result is net loss. Place the difference below the smaller
amount column. Then, enter the word “Net Income or Net
Loss” to the account column titles.
10. Calculate and put in the final Total, then double rule.

8. Sanchai Tan Beauty Salon
Adjusted Trial Balance
January 31, 2012
Account Title Debit Credit
Cash 15,430
Account Receivable 5,900
Office Supplies 22,800
Prepaid Rent 36,000
Equipment 80,000
Accounts Payable 5,200
Notes Payable 20,000
Utilities Payable 3,964

9. Account Title Debit Credit
Tan, Capital 100,000
Tan, Drawing 5,000
Service Revenue 86,600
Wages Expense 38,200
Advertising Expense 5,000
Utilities Expense 3,964
Miscellaneous Expense 3,470
Supplies Expense
Rent Expense
Depreciation Expense
Interest Expense
Total 215,764 215,764