Accounting - Lesson Plan, Copyright © 1996 Art Lightstone

Lesson: 33

Topic: The Eight-Column Worksheet.

Objectives:

During this class we will explore topic #3 of chapter 7 - the Ten Column Worksheet. The ten column worksheet is simply a 6 Column Worksheet with two new sections. These are the "Adjustments" section and the "Adjusted Trial Balance" Section.

The adjustments section is where we record the double entries associated with any adjustments made during the accounting period of the worksheet. For example, if we adjusted our "Supplies on Hand" account by reducing it by $50.00, then we would show a debit to our "Supplies Expense" account and a credit to our "Supplies on Hand" account.

The "Adjusted Trial Balance" section shows the new balance of our accounts after the adjustments have been made. If we carry on the example outlined above, then we would notice that the balance of our "Supplies Expense" account has increased by $50.00, and the balance of our "Supplies on Hand" account has gone down by $50.00.

The new eight-column worksheet allows us to observe our adjustments within their own columns, and then observe the result that these adjustments have on our accounts within the "adjusted" Income Statement and Balance Sheet columns.

The Eight-Column Worksheet below demonstrates how we would record the following adjustments:

Adjusting for $50.00 of supplies which have been consumed during the month:

Date	Account	Debit	Credit
Jan. 31	Supplies Expense	50.00
	Supplies on Hand		50.00

Adjusting for $100.00 of insurance which expired during the month:

Date	Account	Debit	Credit
Jan. 31	Insurance Expense	100.00
	Prepaid Insurance		100.00

Adjusting for $1,000.00 of depreciation on the equipment which was incurred during the month:

Date	Account	Debit	Credit
Jan. 31	Depreciation Expense	1,000.00
	Accumulated Depreciation / Equipment		1,000.00

J. Smith Consulting Service
Worksheet
For the Month Ended January 31, 2001
	Account Title	Acc. No.	Trial Balance		Adjustments		Income Statement		Balance Sheet
	Account Title	Acc. No.	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
1	Cash	101	1,600.00						1,600.00		1
2	Supplies on Hand	105	400.00			50.00			350.00		2
3	Prepaid Insurance	110	1,200.00			100.00			1,100.00		3
4	Furniture	115	1,200.00						1,200.00		4
5	Equipment	120	52,800.00						52,800.00		5
6	Acc. Dep'n/ Equipment	121		3,000.00		1,000.00				4,000.00	6
7	Building	125	50,000.00						50,000.00		7
8	A/P - Midland Co.	205		800.00						800.00	8
9	A/P - Acme Suppliers	210		500.00						500.00	9
10	Mortgage Payable	215		90,000.00						90,000.00	10
11	J. Smith, Capital	301		12,500.00						12,500.00	11
12	J. Smith, Drawings	302	100.00						100.00		12
13	Fees Earned	401		1,800.00				1,800.00			13
14	Hydro Expense	510	200.00				200.00				14
15	Rent Expense	515	1,050.00				1,050.00				15
16	Phone Expense	520	50.00				50.00				16
17			108,600.00	108,600.00							17
18	Supplies Expense				50.00		50.00				18
19	Insurance Expense				100.00		100.00				19
20	Depreciation Expense/Equipment				1,000.00		1,000.00				20
21					1,150.00	1,150.00	2,450.00	1,800.00	107,150.00	107,800.00	21
22							1,800.00				22
23	Net Income / Loss						650.00		650.00		23
24									107,800.00	107,800.00	24

Watch out for This:

A tricky aspect of this entire procedure rests in the fact that we must often create new accounts to facilitate new adjustments. For example, if we had never adjusted our "Supplies on Hand" account before, then we would have to create a new "Supplies Expense" account in order to complete this adjustment. In such a case, a new account will be added at the bottom of our list of accounts at the far left side of the worksheet.

Method of Instruction and Evaluation:

Exercise #1 on page 320 in your text (pages 223 - 224 in your workbook). Note: Students need only complete the worksheet and the journal entries.

Note: An electronic Eight-Column Worksheet has also been made available for your accounting pleasure.

Expectations Addressed:

The "Fundamental Accounting Practices" strand of the BAF3M Ministry of Education Curriculum Guidelines outlines all of the following specific expectations. The expectations addressed by this lesson have been highlighted below.

Introduction to Accounting as a Discipline:
- explain the purpose of accounting;
- explain the difference between accounting and bookkeeping;
- identify the users and uses of accounting;
- identify the Generally Accepted Accounting Principles (GAAP) and explain their importance.
Business Structures:
- describe the characteristics of different forms of business organization, including sole proprietorship, partnership, and corporation;
- describe the advantages and disadvantages of different forms of business organization, including sole proprietorship, partnership, and corporation;
- explain the differences among the equity sections of different forms of business organization, including sole proprietorship, partnership, and corporation (e.g., capital account in a sole proprietorship versus common stock in shareholders’ equity in a corporation).
The Accounting Cycle for a Service Business:
- assess the effects that transactions have on the accounts and financial statements of a service business;
- record transactions using the journals and ledgers of a service business;
- prepare a trial balance and the financial statements for a service business;
- record adjusting and closing entries for a service business (e.g., prepaid expenses, amortization, accruals);
- describe the impact of year-end procedures, including adjusting and closing entries, on the financial statements of a service business;
- apply the Generally Accepted Accounting Principles (GAAP) at each stage of the accounting cycle for a service business.

Reference:

Text, chapter #9, pages 310 - 318.

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