Ten-Column Worksheets

The 10-column worksheet is an all-in-one spreadsheet showing the

transition of account information from the trial balance through the financial
statements. Accountants use the 10-column worksheet to help calculate end-
of-period adjustments. Using a 10-column worksheet is an optional step
companies may use in their accounting process.

Here is a picture of a 10-column worksheet for Printing Plus.

There are five sets of columns, each set having a column for debit and credit,
for a total of 10 columns. The five column sets are the trial balance,
adjustments, adjusted trial balance, income statement, and the balance
sheet. After a company posts its day-to-day journal entries, it can begin
transferring that information to the trial balance columns of the 10-column
worksheet.
The trial balance information for Printing Plus is shown previously. Notice that
the debit and credit columns both equal $34,000. If we go back and look at
the trial balance for Printing Plus, we see that the trial balance shows debits
and credits equal to $34,000.
Once the trial balance information is on the worksheet, the next step is to fill
in the adjusting information from the posted adjusted journal entries.
The adjustments total of $2,415 balances in the debit and credit columns.

The next step is to record information in the adjusted trial balance columns.

To get the numbers in these columns, you take the number in the trial
balance column and add or subtract any number found in the adjustment
column. For example, Cash shows an unadjusted balance of $24,800. There
is no adjustment in the adjustment columns, so the Cash balance from the
unadjusted balance column is transferred over to the adjusted trial balance
columns at $24,800. Interest Receivable did not exist in the trial balance
information, so the balance in the adjustment column of $140 is transferred
over to the adjusted trial balance column.

Unearned revenue had a credit balance of $4,000 in the trial balance column,
and a debit adjustment of $600 in the adjustment column. Remember that
adding debits and credits is like adding positive and negative numbers. This
means the $600 debit is subtracted from the $4,000 credit to get a credit
balance of $3,400 that is translated to the adjusted trial balance column.

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). You will
do the same process for all accounts. Once all accounts have balances in the
adjusted trial balance columns, add the debits and credits to make sure they
are equal. In the case of Printing Plus, the balances equal $35,715. If you
check the adjusted trial balance for Printing Plus, you will see the same equal
balance is present.
Next you will take all of the figures in the adjusted trial balance columns and
carry them over to either the income statement columns or the balance
sheet columns.

Your Turn

Income Statement and Balance Sheet

Take a couple of minutes and fill in the income statement and balance sheet
columns. Total them when you are done. Do not panic when they do not
balance. They will not balance at this time.

Solution
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.

You will notice that when debit and credit income statement columns are
totaled, the balances are not the same. The debit balance equals $5,575,
and the credit balance equals $10,240. Why do they not balance?

If the debit and credit columns equal each other, it means the expenses
equal the revenues. This would happen if a company broke even, meaning
the company did not make or lose any money. If there is a difference
between the two numbers, that difference is the amount of net income, or
net loss, the company has earned.

In the Printing Plus case, the credit side is the higher figure at $10,240. The
credit side represents revenues. This means revenues exceed expenses, thus
giving the company a net income. If the debit column were larger, this would
mean the expenses were larger than revenues, leading to a net loss. You
want to calculate the net income and enter it onto the worksheet. The
$4,665 net income is found by taking the credit of $10,240 and subtracting
the debit of $5,575. When entering net income, it should be written in the
column with the lower total. In this instance, that would be the debit side.
You then add together the $5,575 and $4,665 to get a total of $10,240. This
balances the two columns for the income statement. If you review the
income statement, you see that net income is in fact $4,665.
We now consider the last two columns for the balance sheet. In these
columns we record all asset, liability, and equity accounts.

When adding the total debits and credits, you notice they do not balance.
The debit column equals $30,140, and the credit column equals $25,475.
How do we get the columns to balance?

Treat the income statement and balance sheet columns like a double-entry
accounting system, where if you have a debit on the income statement side,
you must have a credit equaling the same amount on the credit side. In this
case we added a debit of $4,665 to the income statement column. 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.

You may notice that dividends are included in our 10-column worksheet
balance sheet columns even though this account is not included on a
balance sheet. So why is it included here? There is actually a very good
reason we put dividends in the balance sheet columns.

When you prepare a balance sheet, you must first have the most updated
retained earnings balance. To get that balance, you take the beginning
retained earnings balance + net income – dividends. If you look at the
worksheet for Printing Plus, you will notice there is no retained earnings
account. That is because they just started business this month and have no
beginning retained earnings balance.

If you look in the balance sheet columns, we do have the new, up-to-date
retained earnings, but it is spread out through two numbers. You have the
dividends balance of $100 and net income of $4,665. If you combine these
two individual numbers ($4,665 – $100), you will have your updated retained
earnings balance of $4,565, as seen on the statement of retained earnings.

You will not see a similarity between the 10-column worksheet and the
balance sheet, because the 10-column worksheet is categorizing all accounts
by the type of balance they have, debit or credit. This leads to a final balance
of $30,140.

The balance sheet is classifying the accounts by type of accounts, assets and
contra assets, liabilities, and equity. This leads to a final balance of $29,965.
Even though they are the same numbers in the accounts, the totals on the
worksheet and the totals on the balance sheet will be different because of
the different presentation methods.

Link to Learning

Publicly traded companies release their financial statements quarterly for

open viewing by the general public, which can usually be viewed on their
websites. One such company is Alphabet, Inc. (trade name Google). Take a
look at Alphabet’s quarter ended March 31, 2018, financial statements from
the SEC Form 10-Q.

Your Turn

Frank’s Net Income and Loss

What amount of net income/loss does Frank have?

Solution