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After a company posts itsday-to-day journal entries, it can begin transferring thatinformation to the trial balance columns of the 10-columnworksheet. Service Revenue had a $9,500 credit balance in the trial balance column, and a $600 credit balance in the Adjustments column. To get the $10,100 credit balance in the adjusted trial balance column requires adding together both credits in the trial balance and adjustment columns (9,500 + 600). Once all accounts have balances in the adjusted trial balance columns, add the debits and credits to make sure they are equal. If you check the adjusted trial balance for Printing Plus, you will see the same equal balance is present.

The statement of retained earnings always leads with beginningretained earnings. Beginning retained earnings carry over from theprevious period’s ending retained earnings balance. Since this isthe first month of business for Printing Plus, there is nobeginning retained earnings balance. Notice the net income of$4,665 from the income statement is carried over to the statementof retained earnings. Dividends are taken away from the sum ofbeginning retained earnings and net income to get the endingretained earnings balance of $4,565 for January.

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There is no adjustment in the adjustment columns, so theCash balance from the unadjusted balance column is transferred overto the adjusted trial balance columns at $24,800. InterestReceivable did not exist in the trial balance information, so thebalance in the adjustment column of $140 is transferred over to theadjusted trial balance column. Presentation differences are most noticeable between the twoforms of GAAP in the Balance Sheet. Under US GAAP there is nospecific requirement on how accounts should be presented.

The adjusted trial balance is key to accurate financial statements

This trial balance type allows businesses have a summarized view of all the account balances post-adjustment to respective expenditures. The accounts that have been affected because of adjusting entries for the month of December are shown in red font in the adjusted trial balance. It is just for the purpose of explanation, and you don’t need to change the color of account titles in your homework assignments or examination questions.

Adjusted Trial Balance

But there is some more information required to adjust the trial balance. There is a worksheet approach a company may use to make sureend-of-period adjustments translate to the correct financialstatements. Concepts Statements give the Financial Accounting StandardsBoard (FASB) a guide to creating accounting principles and considerthe limitations of financial statement reporting.

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1. The balance sheet is classifying the accounts by type ofaccounts, assets and contra assets, liabilities, and equity.
2. This would happen if a company broke even, meaning the company did not make or lose any money.
3. There are five sets of columns, each set having a column for debit and credit, for a total of 10 columns.
4. The adjustments made, however, are classified into different categories, which include – deferrals, accruals, missing transactions, and tax adjustments.

Looking at the income statement columns, we see that all revenue and expense accounts are listed in either the debit or credit column. This is a reminder that the income statement itself does not organize information into debits and credits, but we do use this presentation on a 10-column worksheet. Unearned revenue had a credit balance of $4,000 in the trial balance column, and a debit adjustment of $600 in the adjustment column.

The preparation of the statement of cash flows, however, requires a lot of additional information. Both the debit and credit columns are accumulated other comprehensive income calculated at the bottom of a trial balance. As with the accounting equation, these debit and credit totals must always be equal.

This means we must add a credit of $4,665 to the balance sheet column. Once we add the $4,665 to the credit side of the balance sheet column, the two columns equal $30,140. In the Printing Plus case, the credit side is the higher figure at $10,240. This means revenues exceed expenses, thus giving the company a net income.