How to Complete the Worksheet with Accounting Principles

in this video we will see how to complete worksheet worksheet is multiple column form used in The Adjustment process and in preparing financial statements it is working tool and not permanent accounting record companies usually computerize worksheets by using an electronic spreadsheet programs such as Excel worksheet is neither journal nor part of the general ledger the use of worksheet is optional worksheet makes it possible to provide the financial statements to the management and the other interested parties at an earlier date let's look at an illustration to understand how we can complete worksheet partial worksheet of Ambit toe company is provided to us it has the adjusted trial balance from which we are required to fill in the income statement and the balance sheet to complete the worksheet an income state shows the financial performance of business for specific time period it presents the revenues and expenses and the resulting net income or net loss for specific period of time first we record revenues Ambit toe has service revenue of $166,000 service Revenue has normal credit balance so we record $116,000 in the credit column of the income statement next we list expenses expenses have normal debit balance and all the expenses are recorded in the debit column of the income statement expenses of Ambit toe include salaries and wages expense of $10,200 rent expense of $900 depreciation expense of $698 and interest expense of $63 total expenses and total revenues incurred During the period are $1,861 and $116,000 resp effectively thus the net income of $4,139 is the excess of Revenue over expenses thus total debit equals total credits next we complete the balance sheet Columns of the worksheet in balance sheet we list assets liabilities and stock ERS Equity first we list assets assets have normal debit balance and therefore will be recorded in the debit column of the balance sheet under assets we have cash of $11,500 accounts receivable of $8,250 prepaid rent of $2,700 and Equipment of $24,105 638 note that accumulated depreciation is contra asset account and has normal credit balance it reduces is the value of assets next we list liabilities and owner's equity which have normal credit balance hence they will be recorded in the credit column of the balance sheet under liabilities we have notes payable of $ 7,620 and accounts payable of $558 Interest payable of $63 liability will be recorded in the credit column of the balance sheet under owner Equity we have owner's capital of $27,900 and owner's drawings of $3,500 note that owner's drawings is contra Equity account and has normal debit balance it reduces the balance of owner's equity the total of the debit column in the balance sheet is $49,990 the total of the credit column excluding net income is $45,881 to this we add the net income of $4,139 which increases owner's equity by adding the net income we notice that total debits equal total credits it indicates that assets equal the sum of liabilities and owners equity