Specifications

Computer Tutorial 3 Lesson 5

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EXERCISE 5.4

Printing a trial balance

1. Click G/L Reports, then double-click the Trial Balance icon. The G/L Trial Balance

Report window opens.

2. In the Report Format drop-down list, select Report. The For Year/Period field should

be changed to 2010-12. Accept all other defaults. Click Print.

3. Return to the G/L Trial Balance Report window. Print another trial balance using

Worksheet as the format.

5. Close the G/L Trial Balance Report window to return to the company desktop.

The worksheet trial balance contains a column labelled Adjustment. After you have printed

the trial balance, you should review the account balances and identify the adjusting entries

required before producing the financial statements.

TOPIC 5.4

Adjusting entries

Accountants are often required to create and post adjusting entries. This topic covers two

perspectives: adjustments to the current year and adjustments to a prior period. At the end of

each fiscal period, adjustments are required to update the accounts to reflect non-routine

transactions and to correct errors.

Common period-end adjustments include:

 recording bank charges, NSF cheques, and interest charges discovered during bank

reconciliations

 reversing interest charges on customers’ accounts

 recording bad debt expense

 recording inventory shrinkage or write-downs

 entering interest receivable on temporary investments

 recording amortization charges

 adjusting accrued liabilities for expenses such as wages earned but unpaid, professional

services received, and so on

 writing off bond discounts or premiums

 adjusting unearned revenue

Making adjusting entries

Assume that a review of your trial balance from Period 12, 2010 discloses that there are three

additional items that require adjustment:

 The allowance for doubtful accounts needs to be increased by $2,000.

 Amortization expense of $18,600 has not been recorded on the equipment.

 There is a $3,570 interest charge on the bank loan (due 2011).

You can print the trial balance in worksheet format and write the adjustments there as a

control document. In this case, for the small number of adjustments, you will enter the

adjustments directly into the general ledger, as illustrated in Exercise 5.5.