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Review from YesterdayWork Sheet is an informal
business paper used to organize and plan the information for the financial
Introduced to 6 column work sheet (next chapter we will move onto 8 column work sheet which includes adjustments)
Work sheet includes Trial Balance (ALL accounts are listed), Income Statement (Revenue & Expenses, calculates net income or net loss), and Balance sheet (includes assets, liabilities, owner’s equity (drawings & capital)
Total all 4 columns in Income Statement and Balance Sheet
Review Cont.
Difference in totals should equal in the income statement & balance sheet
When there is a profit the balancing figure is placed in the 2 outside columns
Income Statement
Balance Sheet
Debit Credit Debit Credit
Total of each column
50 000 75 000 68 000 43 000
Net Income
25 000 ______ ______ 25 000
Total $ 75 000
$ 75 000
$ 68 000 $ 68 000
Balancing Figure
When there is a loss, the balancing figure is placed in the 2 inside columns
Income Statement
Balance Sheet
Debit Credit Debit Credit
Total of each column
60 000 45 000 35 000 50 000
Net Loss ______ 15 000 15 000 ______
Total $ 60 000
$ 60 000
$ 50 000 $ 50 000
Vulcan Rentalls Income Statement
Year Ended December 31, 2011
Create an Income Statement on the sheet provided for Vulcan Rentalls using the work sheet from yesterdays class
Income Statement requires: Revenue & ExpensesNet Income = Revenue >
ExpensesNet Loss = Revenue <
Expenses
Vulcan Rentalls Income StatementYear Ended December 31, 2011
Revenue
Sales $ 95 907.00
Expenses
Advertising Expense
$ 756.00
Bank Charges Expense
1 742.00
Car Expense 6 575.80
Miscellaneous Expense
175.00
Rent Expense 12 000.00
Telephone Expense
1 200.00
Utilities Expense
1370.00
Wages Expense
36 509.19
Total Expenses 60 327.99
Net Income $ 35 579.01
Classified Balance SheetHas the data grouped according to major categories
We have already been introduced to the report form of the balance sheet. It is when the information is presented in a one-above-the-other, or vertical, format.
Major CategoriesAssets:
Current assets- unrestricted cash, an asset that will be converted into cash within one year, or an asset that will be used up within one yearExamples: Bank, Accounts
Receivable
Fixed assets- a long-term asset held for its usefulness in producing goods or services. Same as Plant and Equipment
LiabilitiesCurrent liability- a short-term debt, payment of which is expected to occur within one yearExamples: Bank Loan,
Accounts Payable
Long-term liability- a liability which, in the ordinary course of business, will not be paid within one yearExample: Mortgage Payment
Assets
Current Assets
Bank $ 1,750
Accounts Receivable 35,879
Supplies 1,350 $ 38,979
Fixed Assets
Building $ 55,000
Equipment 15,070
Automobile 33,350
Land (least liquid) 40,000 143,420
Total Assets $ 182,399
Liabilites and Owner's Equity
Current Liabilities
Bank Loan $ 25,000
Accounts Payable 9,088
HST Payable (add PST payable) $ 1,393
Less HST Recoverable 279 1,114
Mortage Instalment (current) 850 $ 36,052
Long-Term Liability Mortgage Payment 80,000
Total Liabilities $ 116,052
J. Otto, Capital
Balance January 1 $ 50,287
Net Income $ 38,560
Drawings 22,500
Increase in Equity 16,060
Balance December 31 66,347
Total Liabilites and Owner's Equity $ 182,399
Peoples’ Security Company
Classified Balance Sheet
December 31, 2011
Heading
Assets < 1 year (very liquid)
Assets > 1 year
Debts to be paid within 1 year (short term)
Debts > 1 year
Net Income > Drawings
Vulcan RentallsClassified Balance SheetDecember 31, 2011
AssetsCurrent Assets Bank $ 3,457.15 Accounts Receivable 19,402.50 Supplies 1,240.00 Total Current Assets $ 24,099.65 Fixed Assets Equipment 20,400.00 Automobiles 32,936.57 Total fixed assets 53,336.57 Total Assets $ 77,436.22
Liabilites and Owner's EquityCurrent Liabilities Bank Loan $ 10,000.00 Accounts Payable 5,296.10 HST Payable $ 1,198.83 Less: HST Recoverable 351.12 Remittance 847.71 Total Liabilities $ 16,143.81 R. Tessier, CapitalBeginning Capital $ 49,713.40 Net Income $ 35,579.01 R. Tessier, Drawings 24,000.00 Increase in Capital 11,579.01 Ending Capital 61,292.41 Total Liabilities and Owner's Equity $ 77,436.22
For tomorrow:Complete Exercise #1, 2 p. 276 (t), p.192-193 (w)
Start exercise #2 ‘Ying Lo’ p. 292 (t) p. 202-204 (w) * Check posted answers on board
