The Worksheet 4-3

permanent accounting record. It is neither a journal nor a part of the general ledger. The
worksheet is merely a device used in preparing adjusting entries and the financial statements.
Companies generally computerize worksheets using an electronic spreadsheet program such
as Microsoft Excel.
Illustration 4.1 shows the basic form of a worksheet and the five steps for prepar-
ing it. Each step is performed in sequence. The use of a worksheet is optional. When a
company chooses to use one, it prepares financial statements directly from the worksheet.
It enters the adjustments in the worksheet columns and then journalizes and posts the
adjustments after it has prepared the financial statements. Thus, worksheets make it pos-
sible to provide the financial statements to management and other interested parties at an
earlier date.

Steps in Preparing a Worksheet

We will use the October 31 trial balance and adjustment data of Pioneer Advertising from
Chapter 3 to illustrate how to prepare a worksheet. In the following pages, we describe and
then demonstrate each step of the process.

Worksheet ILLUSTRATION 4.1

Home Insert Page Layout Formulas Data Review View

P18 fx
Form and procedure for a
A B C D E F G H I J K
worksheet
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2 Worksheet
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Adjusted Income Balance
4 Trial Balance Adjustments Trial Balance Statement Sheet
5 Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
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1 2 3 4
Prepare a Enter Enter Extend adjusted
trial balance adjustment adjusted balances to appropriate
on the data. balances. statement columns.
worksheet. 5
Total the statement columns,
compute net income
(or net loss), and
complete worksheet.