The worksheet is not a formal step in the accounting cycle; it is the rough work.
It is the paperwork.
It is prepared by an accountant regarding adjustment entries.
Therefore, it is called a scratch pad.
It is prepared at end-of-period for the preview of the financial statements.
The worksheet is also known as extended trial balance (ETB).
This terminology is quite popular in British Accounting Literature.
Bad debts on debtors or credit sales |
|
Amortization/write off on Intangible assets |
||
Bad debts account |
Dr |
Amortization/ write off account |
Dr |
|
To Debtors (B/R, A/R) account |
|
To Intangible assets account |
|
|
(Being – bad debts on debtors) |
|
(Being – intangible/fictitious assets write off) |
|
|
Provision for bad debts |
|
Advance income received |
Dr |
|
Provision for bad debts account |
Dr |
Income^ (by name) account |
|
|
To Debtors (B/R, A/R) account |
|
To Advance income^ account |
|
|
(Being – provision for bad debts on debtors) |
|
(Being – income received in advance) |
|
|
Bad debts received which was written off |
|
Expenses expired from advance |
|
|
Cash/bank account |
Dr |
Expenses expired account |
Dr |
|
To Bad debt (recovered) account |
|
To Advance expenses account |
|
|
(Being – bad debts received from debtors) |
|
(Being – expenses expired from advance) |
|
|
Depreciation charged on assets |
|
Goods lost by fire or theft |
|
|
Depreciation account |
Dr |
Insurance claim account |
Dr |
|
To Assets (by name) account |
|
Profit and loss account |
Dr |
|
(Being – depreciation charged on assets) |
|
To Purchase account |
|
|
|
|
(Being – goods destroyed by fire) |
|
|
Appreciation on assets |
|
Closing stock |
|
|
Assets (by name) account |
Dr |
Closing stock account |
Dr |
|
To Appreciation account |
|
To Trading account |
|
|
(Being – appreciation on assets) |
|
(Being – closing stock recorded) |
|
|
Expenses outstanding, payable or due |
|
Proposed dividend |
|
|
Expenses* (by name) account |
Dr |
P&L appropriation account |
Dr |
|
To Outstanding expenses* account |
|
To Proposed dividend account |
|
|
(Being – expenses due, payable, outstanding) |
|
(Being – proposed dividend payable) |
|
|
Prepaid/advance expenses paid |
|
Provision for tax |
|
|
Prepaid expenses# account |
Dr |
P&L account |
Dr |
|
To Expenses# |
|
To Provision for tax account |
|
|
(Being – expenses paid in advance) |
|
(Being – tax payable) |
|
|
Accrued income (income earned but not received) |
Transfer to reserve and fund |
|
||
Accrued Income+ account |
Dr |
P&L appropriation account |
Dr |
|
To Income+ account |
|
To General/capital reserve |
|
|
(Being – income earned but not received) |
|
(Being – transferred to reserve and fund) |
|
|
Step 1: Write the debit balance of ledgers on the debit side and the credit balance of ledgers on the credit side.
Step 2: Write adjustment entries two times i.e. one entry on the debit side and another entry on the credit side.
Step 3: Now, unadjusted trial balance and adjustments are added or subtracted to the adjusted trial balance.
Step 4: both debit and credit sides are added to find out equal.
Here, debit and debit |
= add Dr 100 + Dr 80 |
= Dr 180 |
Credit and credit |
= add Cr 50 + Cr 40 |
= Cr 90 |
Debit and credit = write more amount as debit or credit Dr 80 and Cr 30 = Dr 50 |
||
Credit and debit = write more amount as debit or credit Cr 70 and Dr 40 = Cr 30 |
Step 5: From adjusted trial balance, transfer amount into income statement, P&L appropriation and balance sheet respectively,
Step 6: After transferring the entire amount into a related place, find out net profit or net loss from the income statement,
Step 7: Transfer net profit into credit side of P&L appropriation account (if a net loss, transfer into the debit side)
Step 8: After transferring the net profit or net loss, find out surplus or deficit from P&L appropriation account,
Step 9: Transfer surplus into liabilities side of the balance sheet (deficit into assets side of the balance sheet),
Step 10: Do the sum of the balance sheet. Assets and liabilities must be equal.
Keep in Mind (KIM)
We should prepare 12 columns worksheet on the following conditions: |
When profit and loss appropriation account, net profit last year, provision for tax last year, interim dividend etc are given in the trial balance |
or |
Proposed dividend, general reserve etc are given in adjustment, |
#####
Click on link for YouTube videos |
|
Accounting for Share |
|
Share in Nepali |
|
Debentures |
|
Final Accounts: Class 12 |
|
Final Accounts in Nepali |
|
Work Sheet |
|
Ratio Analysis (Accounting Ratio) |
|
Fund Flow Statement |
|
Cash Flow Statement |
|
Theory Accounting Xii |
|
Theory: Cost Accounting |
|
Cost Accounting |
|
LIFO−FIFO |
|
Cost Sheet, Unit Costing |
|
Cost Reconciliation Statement |
#####
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1A
The trial balance of MJ Company Ltd as on 31st December 2020 is given below:
Particulars |
Amount Dr |
Amount Cr |
|
Share capital |
− |
250,000 |
|
Sales |
− |
400,000 |
|
Creditors |
− |
80,000 |
|
Purchase |
295,000 |
− |
|
Wages |
20,000 |
− |
|
Carriage |
5,000 |
− |
|
Salary |
30,000 |
− |
|
Fixed assets |
300,000 |
− |
|
Debtors |
70,000 |
− |
|
Insurance |
10,000 |
− |
|
Total |
730,000 |
730,000 |
|
Additional information:
(a) Depreciation on fixes assets by 10%
(b) Wages outstanding Rs 5,000
(c) Insurance prepaid Rs 2,000
(d) Bad debts is to be maintained Rs 4,000.
Required: Journal entries for adjustments and work sheet
[Answer: Adjustment = Rs 41,000; Adjusted TB = Rs 735,000;
Net profit = Rs 3,000; Balance sheet = Rs 308,000]
SOLUTION:
Journal Entries for Adjustments
Date |
Particulars |
|
LF |
Amount |
Amount |
a. |
Depreciation on fixed assets account |
Dr |
|
30,000 |
|
|
To Fixed assets account |
|
|
|
30,000 |
|
(Being: depreciation on fixed assets 300,000 @ 10%) |
|
|
|
|
b. |
Wages account |
Dr |
|
5,000 |
|
|
To Outstanding wages account |
|
|
|
5,000 |
|
(Being: wages due for the period) |
|
|
|
|
c. |
Prepaid insurance account |
Dr |
|
2,000 |
|
|
To Insurance account |
|
|
|
2,000 |
|
(Being: insurance paid in advance) |
|
|
|
|
d. |
Bad debts account |
Dr |
|
4,000 |
|
|
To Debtors account |
|
|
|
4,000 |
|
(Being: bad debts is charged on debtors) |
|
|
|
|
Particulars |
Part 1 |
Part 2 |
Part 3 |
Part 4 |
Part 5 |
|||||
|
Trial balance |
Adjustments |
Adjusted TB |
Income statement |
Balance sheet |
|||||
|
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
A |
L |
Share capital |
|
250,000 |
|
|
|
250,000 |
|
|
|
250,000 |
Sales |
|
400,000 |
|
|
|
400,000 |
|
400,000 |
|
|
Creditors |
|
80,000 |
|
|
|
80,000 |
|
|
|
80,000 |
Purchase |
295,000 |
|
|
|
295,000 |
|
295,000 |
|
|
|
Wages |
20,000 |
|
5,000B |
|
25,000 |
|
25,000 |
|
|
|
Carriage |
5,000 |
|
|
|
5,000 |
|
5,000 |
|
|
|
Salary |
30,000 |
|
|
|
30,000 |
|
30,000 |
|
|
|
Fixed assets |
300,000 |
|
|
30,000A |
270,000 |
|
|
|
270,000 |
|
Debtors |
70,000 |
|
|
4,000D |
66,000 |
|
|
|
66,000 |
|
Insurance |
10,000 |
|
|
2,000C |
8,000 |
|
8,000 |
|
|
|
|
730,000 |
730,000 |
|
|
|
|
|
|
|
|
Depreciation on FA |
|
|
30,000A |
|
30,000 |
|
30,000 |
|
|
|
Outstanding wages |
|
|
|
5,000B |
|
5,000 |
|
|
|
5,000 |
Prepaid insurance |
|
|
2,000C |
|
2,000 |
|
|
|
2,000 |
|
Bad debts |
|
|
4,000D |
|
4,000 |
|
4,000 |
|
|
|
Net profit (b/f) |
|
|
|
|
|
|
3,000* |
|
|
3,000* |
Total |
|
|
41,000 |
41,000 |
735,000 |
735,000 |
400,000 |
400,000 |
338,000 |
338,000 |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1B
The trial balance of MJ Company Ltd as on 31st December 2020 is given below:
Particulars |
Amount Dr |
Amount Cr |
|
Share capital |
− |
250,000 |
|
Sales |
− |
400,000 |
|
Purchase |
295,000 |
− |
|
Salary |
20,000 |
− |
|
Carriage |
5,000 |
− |
|
Wages |
30,000 |
− |
|
Land and building |
300,000 |
− |
|
Creditors |
− |
50,000 |
|
Debtors |
40,000 |
− |
|
Prepaid insurance |
10,000 |
− |
|
Total |
700,000 |
700,000 |
|
Additional information:
(A) Appreciation land by Rs 30,000.
(B) Salary includes paid in advance Rs 5,000.
(C) Prepaid insurance expired upto Rs 2,000.
(D) Closing stock valued Rs 40,000.
Required: Journal entries for adjustments and worksheet
[Answer: Adjustment = Rs 77,000; Adjusted TB = Rs 775,000;
Net profit = Rs 123,000; Balance sheet = Rs 423,000]
SOLUTION:
Journal Entries
Date |
Particulars |
|
LF |
Amount |
Amount |
A. |
Fixed assets account |
Dr |
|
30,000 |
|
|
To Appreciation account |
|
|
|
30,000 |
|
(Being: appreciation on fixed assets 300,000 @ 10%) |
|
|
|
|
B. |
Advance salary account |
Dr |
|
5,000 |
|
|
To Salary account |
|
|
|
5,000 |
|
(Being: salary paid in advance) |
|
|
|
|
C. |
Prepaid insurance expired account |
Dr |
|
2,000 |
|
|
To Prepaid insurance account |
|
|
|
2,000 |
|
(Being: advance insurance expired) |
|
|
|
|
D. |
Closing stock account |
Dr |
|
40,000 |
|
|
To Income statement account |
|
|
|
40,000 |
|
(Being: value of closing stock recorded) |
|
|
|
|
|
|
|
|
|
|
Ten Columns Work Sheet
Particulars |
Part 1 |
Part 2 |
Part 3 |
Part 4 |
Part 5 |
|||||
Trial balance |
Adjustments |
Adjusted TB |
Income statement |
Balance sheet |
||||||
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
A |
L |
|
Share capital |
|
250,000 |
|
|
|
250,000 |
|
|
|
250,000 |
Sales |
|
400,000 |
|
|
|
400,000 |
|
400,000 |
|
|
Purchase |
295,000 |
|
|
|
295,000 |
|
295,000 |
|
|
|
Salary |
20,000 |
|
5,000B |
15,000 |
|
15,000 |
|
|
|
|
Carriage |
5,000 |
|
|
|
5,000 |
|
5,000 |
|
|
|
Wages |
30,000 |
|
|
|
30,000 |
|
30,000 |
|
|
|
Land and building |
300,000 |
|
30,000A |
|
330,000 |
|
|
|
330,000 |
|
Creditors |
|
50,000 |
|
|
|
50,000 |
|
|
|
50,000 |
Debtors |
40,000 |
|
|
40,000 |
|
|
|
40,000 |
|
|
Prepaid insurance |
10,000 |
|
|
2,000C |
8,000 |
|
|
8,000 |
|
|
|
700,000 |
700,000 |
|
|
|
|
|
|
|
|
Appreciation on FA |
|
|
|
30,000A |
|
30,000 |
|
30,000 |
|
|
Advance salary |
|
|
5,000B |
5,000 |
|
|
5,000 |
|||
Prepaid ins. expired |
|
|
2,000C |
|
2,000 |
|
2,000 |
|
|
|
Closing stock |
|
|
40,000D |
40,000D |
40,000D |
40,000D |
40,000 |
40,000 |
|
|
Net profit (b/f) |
|
|
|
|
|
|
123,000 |
|
|
123,000 |
Total |
|
|
77,000 |
77,000 |
770,000 |
770,000 |
470,000 |
470,000 |
423,000 |
423,000 |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1C
The trial balance of XYZ Company Ltd as on 31st December 2020 is given below:
Particulars |
Amount Dr |
Amount Cr |
|
Share capital |
− |
250,000 |
|
Sales |
− |
350,000 |
|
Sundry receipt |
− |
50,000 |
|
Purchase |
295,000 |
− |
|
Wages |
20,000 |
− |
|
Carriage outward |
5,000 |
− |
|
Salary |
30,000 |
− |
|
Fixed assets |
250,000 |
− |
|
Preliminary expenses |
50,000 |
− |
|
Creditors |
− |
50,000 |
|
Debtors |
40,000 |
− |
|
Prepaid insurance |
10,000 |
− |
|
|
700,000 |
700,000 |
|
Additional information:
(A) Preliminary expenses are written off by Rs 10,000.
(B) Sundry receipt includes advance income of Rs 5,000.
(C) Bad debts written off Rs 8,000 on debtors.
(D) Goods destroyed by Rs 10,000 but insurance company accepted claim only Rs 7,000.
Required: Journal entries for adjustments and work sheet
[Answer: Adjustment = Rs 33,000; Adjusted TB = Rs 700,000;
Net profit = Rs 34,000; Balance sheet = Rs 339,000]
SOLUTION:
Journal Entries
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
A |
Preliminary expenses written off account |
Dr |
|
10,000 |
|
|
To Preliminary expenses account |
|
|
|
10,000 |
|
(Being: preliminary expenses written off) |
|
|
|
|
B |
Sundry receipt account |
Dr |
|
5,000 |
|
|
To Advance income account |
|
|
|
5,000 |
|
(Being: advance income received) |
|
|
|
|
C |
Band debts account |
Dr |
|
8,000 |
|
|
To Debtors account |
|
|
|
8,000 |
|
(Being: bad debts written off on debtors) |
|
|
|
|
D |
Insurance claim account |
Dr |
|
7,000 |
|
|
P&L (income statement) account |
Dr |
|
3,000 |
|
|
To Purchase account |
|
|
|
10,000 |
|
(Being: goods destroyed and partial claim accepted) |
|
|
|
|
Ten Columns Work Sheet
Particulars |
Part 1 |
Part 2 |
Part 3 |
Part 4 |
Part 5 |
|||||
|
Trial balance |
Adjustments |
Adjusted TB |
Income statement |
Balance sheet |
|||||
|
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
A |
L |
Share capital |
|
250,000 |
|
|
|
250,000 |
|
|
|
250,000 |
Sales |
|
350,000 |
|
|
|
350,000 |
|
350,000 |
|
|
Sundry receipt |
|
50,000 |
5,000B |
|
|
45,000 |
|
45,000 |
|
|
Purchase |
295,000 |
|
|
10,000D |
285,000 |
|
285,000 |
|
|
|
Wages |
20,000 |
|
|
|
20,000 |
|
20,000 |
|
|
|
Carriage outward |
5,000 |
|
|
|
5,000 |
|
5,000 |
|
|
|
Salary |
30,000 |
|
|
|
30,000 |
|
30,000 |
|
|
|
Fixed assets |
250,000 |
|
|
|
250,000 |
|
|
|
250,000 |
|
Preliminary expenses |
50,000 |
|
|
10,000A |
40,000 |
|
|
|
40,000 |
|
Creditors |
|
50,000 |
|
|
|
50,000 |
|
|
|
50,000 |
Debtors |
40,000 |
|
|
8,000C |
32,000 |
|
|
|
32,000 |
|
Prepaid insurance |
10,000 |
|
|
|
10,000 |
|
|
|
10,000 |
|
|
700,000 |
700,000 |
|
|
|
|
|
|
|
|
Preliminary exp written off |
|
|
10,000A |
|
10,000 |
|
10,000 |
|
|
|
Advance income |
|
|
|
5,000B |
|
5,000 |
|
|
|
5,000 |
Bad debts |
|
|
8,000C |
|
8,000C |
|
8,000 |
|
|
|
Loss by fire |
|
|
3,000D |
|
3,000D |
|
3,000 |
|
|
|
Insurance claim |
|
|
7,000D |
|
7,000D |
|
|
|
7,000 |
|
Net profit (b/f) |
|
|
|
|
|
|
34,000* |
|
|
34,000* |
|
|
|
33,000 |
33,000 |
700,000 |
700,000 |
400,000 |
395,000 |
339,000 |
339,000 |
#####
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1A
The trial balance of AK Company Ltd as on 31st December is given below:
Particulars |
Amount Dr |
Amount Cr |
|
Share capital |
|
5,00,000 |
|
Revenue |
|
3,00,000 |
|
Bank overdraft |
|
15,000 |
|
Wages |
2,00,000 |
|
|
Land and building |
3,00,000 |
|
|
Carriage |
15,000 |
|
|
Sundry debtors |
80,000 |
|
|
Plant and machinery |
2,00,000 |
|
|
Advertisement |
10,000 |
|
|
Insurance |
10,000 |
|
|
Total |
8,15,000 |
8,15,000 |
|
Additional information:
a. Depreciate plant and machinery by 10%
b. Insurance prepaid was Rs 4,000
c. Outstanding wages is Rs 20,000.
Required: Adjustment entries and ten column worksheet
[Answer: Adjustment = Rs 44,000; Adjusted TB = Rs 835,000,
Net profit = Rs 29,000; Balance sheet = Rs 564,000;
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1B
The trial balance of MK Company Ltd as on 31st December is given below:
Particulars |
Amount Dr |
Amount Cr |
|
Share capital |
|
2,50,000 |
|
Sales |
|
4,50,000 |
|
Purchases |
2,95,000 |
|
|
Wages |
20,000 |
|
|
Carriage |
5,000 |
|
|
Salaries |
30,000 |
|
|
Fixed assets |
3,00,000 |
|
|
Creditors |
– |
50,000 |
|
Debtors |
90,000 |
|
|
Insurance |
10,000 |
|
|
Total |
7,50,000 |
7,50,000 |
|
Additional information:
(a) Depreciate fixed assets by 10%.
(b) Wages outstanding Rs 25,000.
(c) Insurance prepaid Rs 2,000.
(d) Bad debts Rs 3,000.
Required: Ten column worksheet
[Answer: Adjustment = Rs 60,000; Adjusted TB = Rs 775,000,
Net profit = Rs 34,000; Balance sheet = Rs 359,000)
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