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Chapter 6 Appendix
The Accounting Cycle: Statements and Closing Entries
Appendix 6A: The 10-ColumnWorksheet
Earlier, we introduced the six-column worksheet to help display the changes in account balances
due to adjustments. Although this worksheet is optional, it shows the unadjusted trial balance, the
adjustments and the adjusted trial balance all in one place. An extension of this is the optional
ten-column worksheet. In this worksheet, the first six columns are identical to what we learned.
The extra columns are to show the accounts and balances that will appear on the financial state-
ments. One set of columns is for the income statement accounts and the other set is for the balance
sheet and owner’s equity accounts.The values shown in these columns are copied directly from the
adjusted trial balance columns.
In Figure 6A.1, the income statement accounts are separated from the balance sheet and equity
accounts. Notice that the initial debit and credit totals of the income statement accounts do not
balance. This is expected because the company should report an income or loss. In this case, MP
Consulting shows a greater credit balance (see numbers 1 and 2). Since the credit total is higher,
they generated an income. Find the difference between the two figures and add the difference to
the smaller total. In the case of MP Consulting, the difference is $3,175 (see number 3) and is
added to the smaller debit total to get $4,500.This ensures the income statement columns balance.
If the company had a net loss, the difference would be added to the credit column to ensure the
income statement columns balance.
A similar process is completed for the balance sheet and equity columns. The difference is calcu-
lated and added to the smaller total (see number 4) to ensure the balance sheet and equity columns
balance. Notice that the difference between the income statement columns and the difference
between the balance sheet and equity columns are identical.This should always be the case. A net
income will increase the capital account; therefore it will always be a credit to the balance sheet
and equity accounts. Conversely, a net loss decreases equity and is placed on the debit side of the
balance sheet and equity accounts.
