CHAPTER 9 Worksheet includes: account title, unadjusted trial balance,

adjustments, adjusted trial balance, income statement, balance

ACCOUNTING CYCLE OF A SERVICE BUSINESS
sheet
Service business
Cash 200,000
One that offers services as its main product rather than
Capital 200,000
physical goods
Cash 100,000
STEPS:
Notes payable 100,000
ADJUSTED TRIAL BALANCE (and/or worksheet)
(EXPENSE METHOD) Rent expense 60,000
FINANCIAL STATEMENTS
Cash 60,000
CLOSING ENTRIES
(ASSET METHOD) Prepaid Rent
POST CLOSING TRIAL BALANCE
Cash
REVERSING ENTRIES
Equipment 180,000
WORKSHEET- an analytical device used to facilitate the gathering of
data for adjustments, the preparation of financial statements, and Cash 180,000
closing entries.
(EXPENSE METHOD) Supplies Expense 50,000
-optional and not part of formal accounting records
Cash 50,000
-usually prepared because they greatly facilitate the orderly
(ASSET METHOD) Prepaid Supplies
record of the financial statements
Cash
-most commonly prepared using spreadsheet application
Cash 220,000
WORKSHEET IS PREPARED AS FOLLOWS
Service Income 220,000
Heading of the worksheet includes: name of the business,
title of the report, and date covered by the report Owners drawing 40,000

Cash 40,000
Cash Rent expense

Dr. cr. Dr. cr.

200 60

100 60

60
Supplies Expense
180
Dr. cr.
50
50
40
50
220

190
Equipment

Dr. cr.
Capital
180
Dr. Cr.
180
200

200
Withdrawal

Dr. cr.
Note Payable
40
Dr. cr.
40
100

100
Service income

Dr. cr.

220

220
FINANCIAL STATEMENTS-the end product of the accounting
process. Information from the journal and the ledger are
meaningless to most users unless they are summarized and
communicated through the financial statements.

1. Statement of financial position (or balance sheet) - shows

information on assets, liabilities, and equity
2. Statement of profit or loss (or income statement) – shows
information on income and expenses, and consequently,
the profit or loss for the period.
 The preparation of balance sheet and income statement is
greatly facilitated by the worksheet.