Week Four Reflection
UOP
Accounting/290
August 08, 2012
Week Four Reflection
In week 3, Team C learned how to prepare closing entries, reverse entries, post-closing trail balances, and prepare the needed financial statements for the accounting period or year. The first step in the accounting cycle is to prepare the trial balances by analyzing all the transactions that have posted to the t-accounts throughout the period. Once you have these balances, the second step is to make appropriate adjustments to the entries and make your closing entries to the temporary accounts. The temporary accounts will always need to be closed out by making the closing entries to zeros to start the new accounting period. This process will need to take place every accounting period and the accounts will always start with a zero balance. Third step is to prepare the new adjusted trial balance which summarizes the period’s revenues and expenses for that period. The balances from the adjust trial balance will need to be transferred to the balance statement and the income statement.
The balances from the Adjusted Trail Balance are carried to the Income statement and Balance sheet Columns. These columns will need to be added up and should be equal. These columns will show the “Net Income” and “Net Loss” for that period. The worksheet is very useful in recording the adjusting and closing entries and will help with preparing the financial statements. The totals from the worksheet could be transferred straight to the Income Statement and Balance sheet to show the totals. Depending on what type of accounts they are will depend on if they will be on the Income Statement or the Balance Sheet columns. All expenses will always be on the income statement and all assets, liabilities, Capital, and withdrawals will be on the balance sheet. At this point, the retained earnings sheet is ready to be prepared. The retained earnings will show the retained earnings from the prior year’s totals, plus the net loss or the net income from the income statement, and will subtract any dividends for that period. That will be your retained earnings for that year or period. This amount will then be placed on the retained earnings statement for the next year and so forth.
Samples of worksheets
Sample Preparing Closing Entries, Reversing Entries, and Post-closing trial balance
Trial Balance
August 31, 2010
Cash
$ 10,072
Accounts Receivable
29,314
Prepaid Insurance
5,340
Delivery Supplies
14,700
Office Supplies
2,460
Land
15,000
Building
196,000
Accumulated Depreciation–Building
$ 53,400
Trucks
103,800
Accumulated Depreciation–Trucks
30,900
Office Equipment
15,900
Accumulated Depreciation–Office Equipment
10,800
Accounts Payable
9,396
Unearned Lockbox Fees
8,340
Mortgage Payable
72,000
N. Reed, Capital
128,730
N. Reed, Withdrawals
30,000
Delivery Service Revenue
283,470
Lockbox Fees Earned
28,800
Truck Drivers’ Wages Expense
120,600
Office Salaries Expense
44,400
Gas, Oil, and Truck Repairs Expense
31,050
Interest Expense
7,200
$625,836
$625,836
Sample of Financial Statement Worksheet
Work Sheet for the year ended 12.31.2012 Account Title
Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
1
Cash
37080
