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LESSON 22-1. Preparing a Work Sheet for a Corporation. 1.Debit Interest Receivable. INTEREST INCOME ADJUSTMENT. page 638. 1. 2. 2.Credit Interest Income. SUPPLIES ADJUSTMENT. page 638. 1. 2. 1.Credit Supplies. 2. Debit Supplies Expense. FEDERAL INCOME TAX ADJUSTMENT. page 639. - PowerPoint PPT Presentation
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-1LESSON 22-1
Preparing a Work Sheet for a Corporation
2
LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
INTEREST INCOME ADJUSTMENTINTEREST INCOME ADJUSTMENT
1. Debit Interest Receivable.
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22
page 638
2. Credit Interest Income.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
1. Credit Supplies.
SUPPLIES ADJUSTMENTSUPPLIES ADJUSTMENT
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22
page 638
2. Debit Supplies Expense.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
1. Debit Federal Income Tax Expense.
FEDERAL INCOME TAX ADJUSTMENTFEDERAL INCOME TAX ADJUSTMENT
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11
page 639
2. Credit Federal Income Tax Payable.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
COMPLETING A WORK SHEETCOMPLETING A WORK SHEET page 641
4422
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33
55
1. Total the Income Statement and Balance Sheet columns.
2. Calculate and enter the net income after federal income tax.
3. Extend the net income after federal income tax amount.
4. Calculate the column totals.
5. Rule double lines.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-2LESSON 22-2
Preparing an Income Statement
7
LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
INCOME STATEMENTINCOME STATEMENT page 645
8
LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
INCOME STATEMENTINCOME STATEMENT page 645
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
INCOME STATEMENTINCOME STATEMENT page 645
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
ANALYZING AN INCOME STATEMENTANALYZING AN INCOME STATEMENT page 647
Cost of Merchandise Sold Component
Percentage=Net Sales÷
Cost of Merchandise
Sold
57.3%=$2,078,876.70÷$1,190,794.80
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-3LESSON 22-3
Preparing a Statement of Stockholders’ Equity and Balance Sheet
12
LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
STATEMENT OF STOCKHOLDERS’ STATEMENT OF STOCKHOLDERS’ EQUITYEQUITY
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22
33
page 649
2. Prepare the capital stock section.
1. Write the heading.
3. Prepare the retained earnings section.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
BALANCE SHEETBALANCE SHEET page 650
14
LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
BALANCE SHEETBALANCE SHEET page 650
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
ANALYZING A BALANCE SHEETANALYZING A BALANCE SHEET page 652
WorkingCapital
=Total
Current Liabilities
–Total Current
Assets
$172,100.02=$57,494.53–$229,594.55
CurrentRatio
=Total
Current Liabilities
÷Total Current
Assets
4.0 to 1=$57,494.53÷$229,594.55
Working Capital
Current Ratio
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
TERMS REVIEWTERMS REVIEW
long-term liabilities working capital current ratio
page 653
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 22-4LESSON 22-4
Adjusting, Closing, and Reversing Entries for a Corporation
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
ADJUSTING ENTRIESADJUSTING ENTRIES page 654
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
CLOSING ENTRY FOR ACCOUNTS CLOSING ENTRY FOR ACCOUNTS WITH CREDIT BALANCESWITH CREDIT BALANCES
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page 655
1. Enter the balance of accounts in the Income Statement credit column as a debit.
2. Enter the total of the debit entries as a credit to Income Summary.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
CLOSING ENTRY FOR ACCOUNTS CLOSING ENTRY FOR ACCOUNTS WITH DEBIT BALANCESWITH DEBIT BALANCES
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page 656
3. Enter the total of the credit entries as a debit to Income Summary.
2. Enter the balance of every account in the Income Statement debit column as a credit.
1. Enter the account title Income Summary.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
CLOSING ENTRY TO RECORD CLOSING ENTRY TO RECORD NET INCOMENET INCOME
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page 657
2. Credit Retained Earnings.
1. Debit Income Summary.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
CLOSING ENTRY FOR DIVIDENDSCLOSING ENTRY FOR DIVIDENDS
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22
page 657
2. Credit Dividends.
1. Debit Retained Earnings.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
REVERSING ENTRIESREVERSING ENTRIES
2233
page 658
113. Reverse the entry that
created a balance in Federal Income Tax Payable.
2. Reverse the entry that created a balance in Interest Payable.
1. Reverse the entry that created a balance in Interest Receivable.
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LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
(continued on next slide)
ACCOUNTING CYCLE FOR A MERCHANDISING ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATIONBUSINESS ORGANIZED AS A CORPORATION
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page 659
1. Source documents are checked for accuracy, and transactions are analyzed into debit and credit parts.
2. Transactions, from information on source documents, are recorded in journals.
3. Journal entries are posted to the accounts payable, accounts receivable, and general ledgers.
4. Schedules of accounts payable and accounts receivable are prepared from the subsidiary ledgers.
25
LESSON 22-1CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
9. Reversing entries are journalized and posted to the general ledger.
ACCOUNTING CYCLE FOR A MERCHANDISING ACCOUNTING CYCLE FOR A MERCHANDISING BUSINESS ORGANIZED AS A CORPORATIONBUSINESS ORGANIZED AS A CORPORATION
99
88
7755
66
page 659
5. A work sheet, including a trial balance and an adjustment for federal income tax expense, is prepared from the general ledger.
6. Financial statements are prepared from the work sheet.
7. Adjusting and closing entries are journalized from the work sheet and posted to the general ledger.
8. A post-closing trial balance of the general ledger is prepared.
(continued from previous slide)
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