Course Code: ACC 102

Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Lesson title: Constructing Worksheet and Financial Statements Materials:

Lesson Objectives: Module #6
1. Illustrate and discuss the preparation of financial
worksheet. Reference:
2. Prepare the financial statements Fundamentals of Financial
3. Acquaint and demonstrate the relationship among Accounting and Reporting by
financial statements Win Ballada

Productivity Tip:

To keep motivated, you have to have fun and reward yourself after working hard. Taking breaks can
help you keep going and stay productive, even when you don’t feel like it at the moment.

A. LESSON PREVIEW/REVIEW
1) Introduction (2 mins)

Accountants often use a worksheet to help transfer data from the unadjusted trial balance to the
financial statements. An accounting worksheet is a multi-column document that is used to determine
the accuracy of the financial statements prepared by a company at the end of the accounting period. It
also assists in keeping track of the steps involved in the accounting cycle.

For this lesson, take note and be reminded about the following:

Worksheet – is a columnar sheet used as a tool or bridge connecting the Trial Balance and Financial
Statements.

Real accounts (permanent accounts) – these are the elements of financial statements found in the
statement of financial position (balance sheet), namely Assets, Liabilities and Owner’s Equity.

Nominal accounts (temporary accounts) – these are the elements of financial statements found in the
statement of financial performance (income statement), namely: Income and Expenses.

Profit – when the income earned is greater the expenses incurred during the period.

Loss – when the income earned is less than the expenses incurred during the period.

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FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

2) Activity 1: What I Know Chart, part 1 (3 mins)

Try answering the questions below by writing your ideas under the What I Know column. You may use
key words or phrases that you think are related to the questions. Answer the What I learned section
after reading the Concept notes

What I Know Questions: What I Learned

What is an accounting worksheet?

What is a real account?

What are nominal accounts?

B. MAIN LESSON
1) Activity 2: Pre-Printed Content Notes (13 mins)

The steps in the preparation of a worksheet follow:

Steps in the preparation of a worksheet

Step 1 Write the name of the business or proprietor if there is no trade name, the title of
the report and the period covered by the report. These are written at the center of
the uppermost portion of the columnar sheet. The period maybe for a month, a
quarter, a semi-annual accounting period or a year;
Step 2 Copy the trial balance “as it is” in the unadjusted trial balance column of the
worksheet and double rule;
Step 3 Enter the adjusting entries in the Adjustments Column; make sure that a letter
marking is used in order to identify the debit entry and the corresponding credit
entry. If the account title is not in the TB, write it below the last account title of the
TB. The debit and credit totals of the adjustments column should be equal.
Step 4 Total horizontally each account (observing the debit and credit rules) and write the
new account balance under the “adjusted trial balance” column.

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 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Steps in the preparation of a worksheet

Step 5 Extend the balances of the nominal accounts to the statement of financial
performance (income statement) section observing the debit and credit balances of
accounts appearing in the Adjusted Trial Balance.
Step 6 Extend the balances of the real accounts to the statement of financial position
(balance sheet) section observing the debit and credit balances of accounts
appearing in the Adjusted Trial Balance.
Step 7 Foot the debit and credit amount columns of the statement of financial
performance and statement of financial position and place the totals at the bottom
of their respective columns in the same line with the double ruled total of the trial
balance.

At this point, the following results can be observed:

1. The amounts of the debit and credit columns of both the statement of financial
performance and the statement of financial position are not equal.
2. That the amount of difference between the debit and credit money columns of
the statement of financial performance is the same amount of difference between
the debit and credit columns of statement of financial position.
3. The same amount of difference between the debit and credit totals of both the
statement of financial performance and statement of financial position represents
either the “profit” or “loss” from operations.
Step 8 Enter the amount of difference in the columns of both the statement of financial
performance and statement of financial position which showed a smaller total in
the next line following their totals and label it their “Net Income” or “Loss”.
Step 9 After the “Profit” of “Loss” is extended, total the debit and credit columns of the
statement of financial performance and statement of financial position. As they now
have equal balances, double rule the amounts.

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 Lara Jean Repairs and Maintenance Service
Worksheet
For the month ended 31 June 2022
Unadjusted Adjusted Statement of Financial Statement of Financial
Adjustments
Trial Balance Trial Balance Performance Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash in Bank 743,000
Accounts Receivable 35,000
Repair Supplies 90,000
Repair Equipment 150,000
Notes Payable 100,000
Accounts Payable 30,000
Balance in the unadjusted balance is exactly the
L. Jean, Capital 850,000 same as the trial balance. The totals of debit and
L. Jean, Drawing 10,000 credit are equal.
Repair Income 80,000
Salaries Expense 10,000
Rent Expense 5,000
Utilities Expense 12,000
Taxes and Licenses 4,000
Interest Expense 1,000
Single rule the sum of each
Total 1,060,000 1,060,000 column. No peso sign was used
in this worksheet.

Adjusting Entries
Estimated Uncollectible
P 350 Depreciation Expense P 2,500
a Accounts c
Allowance for Uncollectible P 350 Accumulated Depreciation P 2,500
b Repair Supplies Expense P 20,000 d Advertising Expense P 3,000
Repair Supplies P 20,000 Accrued Advertising P 3,000

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 Lara Jean Repairs and Maintenance Service
Worksheet
For the month ended 31 June 2022
Unadjusted Adjusted Statement of Financial Statement of
Adjustments
Trial Balance Trial Balance Performance Financial Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash in Bank 743,000
Accounts Receivable 35,000
Repair Supplies 90,000 (b) 20,000
Repair Equipment 150,000
Notes Payable 100,000
Accounts Payable 30,000
L. Jean, Capital 850,000
L. Jean, Drawing 10,000 Letters were identified and
Repair Income 80,000 sequenced according to the
Salaries Expense 10,000 adjusting entries.
Rent Expense 5,000
Utilities Expense 12,000
Taxes and Licenses 4,000
Interest Expense 1,000
Total 1,060,000 1,060,000
Adjustments:
Uncollectible Account (a) 350
Est. Uncollectible Acct. (a) 350
Repair Supplies Exp. (b) 20,000
Depreciation Expense (c) 2,500
Accum. Depreciation (c) 2,500
Advertising Expense (d) 3,000
Accrued Advertising (d) 3,000
Total 25,850 25,850

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 Lara Jean Repairs and Maintenance Service
Worksheet
For the month ended 31 June 2022
Unadjusted Adjusted Statement of Financial Statement of
Adjustments
Trial Balance Trial Balance Performance Financial Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash in Bank 743,000 743,000
Accounts Receivable 35,000 35,000 The amounts in the unadjusted trial balance
and adjustments are combined. If the
Repair Supplies 90,000 (b) 20,000 70,000
amounts have the same column, they are
Repair Equipment 150,000 150,000 added. If the amounts have opposite
Notes Payable 100,000 100,000 columns, say, one is in the debit and the
Accounts Payable 30,000 30,000 other one is in the credit, get their difference
L. Jean, Capital 850,000 850,000 and follow the column of the amount which
has the greater value.
L. Jean, Drawing 10,000 10,000
Repair Income 80,000 80,000
Salaries Expense 10,000 10,000
Rent Expense 5,000 5,000
Utilities Expense 12,000 12,000
Taxes and Licenses 4,000 4,000
Interest Expense 1,000 1,000
Total 1,060,000 1,060,000
Adjustments:
Uncollectible Account (a) 350 350
Est. Uncollectible Acct. (a) 350 350
Repair Supplies Exp. (b) 20,000 20,000
Depreciation Expense (c) 2,500 2,500
Accum. Depreciation (c) 2,500 2,500
Advertising Expense (d) 3,000 3,000
Accrued Advertising (d) 3,000 3,000
Total 25,850 25,850 1,065,850 1,065,850

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 Lara Jean Repairs and Maintenance Service
Worksheet
For the month ended 31 June 2022
Unadjusted Adjusted Statement of Financial Statement of Financial
Adjustments
Trial Balance Trial Balance Performance Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash in Bank 743,000 743,000 743,000
Accounts Receivable 35,000 35,000 35,000
Repair Supplies 90,000 (b)20,000 70,000 70,000
Repair Equipment 150,000 150,000 150,000
Notes Payable 100,000 100,000 100,000
Accounts Payable 30,000 30,000 30,000
L. Jean, Capital 850,000 850,000 850,000
L. Jean, Drawing 10,000 10,000 10,000
Repair Income 80,000 80,000 80,000
Salaries Expense 10,000 10,000 10,000
Rent Expense 5,000 5,000 5,000
Utilities Expense 12,000 12,000 12,000
Taxes and Licenses 4,000 4,000 4,000
Interest Expense 1,000 1,000 1,000
Total 1,060,000 1,060,000
Adjustments:
Uncollectible Account (a) 350 350 350
Est. Uncollectible Acct. (a) 350 350 350
Repair Supplies Exp. (b) 20,000 20,000 20,000
Depreciation Expense (c) 2,500 2,500 2,500
Accum. Depreciation (c) 2,500 2,500 2,500
Advertising Expense (d) 3,000 3,000 3,000
Accrued Advertising (d) 3,000 3,000 3,000
Total 25,850 25,850 1,065,850 1,065,850 57,850 80,000 1,008,000 985,850
22,150 22,150
80,000 80,000 1,008,000 1,008,000
The profit or loss is balancing figure for both the income statement and the
balance sheet. The difference in statement of financial performance section and statement of financial
position section is the same.
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FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

STATEMENT OF FINANCIAL POSITION

The statement of financial position is a statement that shows the financial position or condition of an entity by
listing the assets, liabilities, and owner’s equity as at the specific date. This statement is also called the
balance sheet. The balance sheet can be presented In either the following format:

Report format – balance sheet format that lists assets, liabilities and owner’s equity in vertical sequence.
Account format – balance sheet format that lists the assets on the left side and the liabilities and owner’s
equity on the right side.

STATEMENT OF CASH FLOW

The statement of cash flows provides information about cash receipts and cash payments of an entity during
the period. This statement is presented in the following format:

Direct method – a method in preparing the statement of cash flow from operating activities by adding the
individual operating cash inflows and subtracting the individual operating cash outflows.
Indirect method – a method in preparing the statement of cash flow from operating activities by adjusting
profit for income and expense items not resulting from cash transactions.

Statement of cash flow presents cash flows from the following activities:

Operating Activities – the inflows and outflows of cash from the normal operating activities of the business.
Investing Activities – the inflows and outflows of cash from the sale or purchase of assets other than
inventory.
Financing Activities – the inflows and outflows of cash from the owners and creditors of the enterprise.

Relationships Among Financial Statements:

1. The statement of financial performance reports all income and expenses during the period. The profit or
loss is the final figure in this statement.
2. The statement of changes in equity considers the profit or loss figure from the income statement as one of
the determining factors that explains the change in owner’s equity.
3. The statement of financial position reports the ending owner’s equity, taken directly from the statement of
changes in equity.
4. The statement of cash flows reports the net increase or decrease in cash during the period and ends with
cash balance reported in the balance sheet. This statement is prepared based on information from the
income statement and the balance sheet

1
FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Using the data of the illustrative problem above, the financial statements can now be prepared.

Lara Jean Repairs and Maintenance Service

Statement of Financial Performance
For the month ended 31 June 2022

Revenue:
Repair Income P80,000

Operating Expenses:
Uncollectible Accounts P350
Depreciation Expense 2,500
Salaries Expense 10,000
Rent Expense 5,000
Utilities 12,000
Repair Supplies Expense 20,000
Taxes and Licenses 4,000
Advertising Expense 3,000 56,850
Operating Income 23,150
Less: Finance Charges
Interest Expense 1,000
Profit for the month P22,150

Usually, the Statement of Financial Performance is the first statement that will be prepared because aside from
the reason that this is shown ahead of the Balance Sheet in the worksheet, it is much easier to gather the data
and the format is so simple.

Lara Jean Repairs and Maintenance Service

Statement of Changes in Owner's Equity
For the month ended 31 June 2022

L. Jean, Capital - June 1, 2022 P850,000

Add: Additional Investment P -
Profit 22,150 22,150
Total 872,150
Less: Withdrawal 10,000
L. Jean, Capital - June 31, 2022 P862,150

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 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Note that L. Jean, Capital beginning of P850,000 was reduced by his withdrawal of P10,000 and increased by
P22,150 representing the profit for the month or a new total of P862,150. This is the present owner’s capital
and the same will appear in the Statement of Financial Position below.

Lara Jean Repairs and Maintenance Service

Statement of Financial Position
As of June 31, 2022

ASSETS
Current Assets:
Cash in Bank P743,000
Accounts Receivable P35,000
Less: Estimated Uncollectible Accounts 350 34,650
Laundry Supplies 70,000
Total Current Assets 847,650

Non-Current Assets:
Property and Equipment
Laundry Equipment 150,000
Less: Accumulated Depreciation 2,500
Total Non-Current Assets 147,500
Total Assets P995,150
LIABILITIES
Current Liabilities:
Notes Payable P100,000
Accounts Payable 30,000
Accrued Advertising 3,000
Total Current Liabilities 133,000
OWNER'S EQUITY
Equity
L. Jean, Capital 862,150
Total Liabilities and Owner's Equity P995,150

For purposes of this illustration, the format used is report format. Note however, that the standards did not
specify the required format, hence the company can use either report format or account format.

The next statement that can be prepared is the Statement of Cash Flows, for purposes of this illustration the
direct method is used in presenting the Statement of Cash Flows.

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 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Cash-in-Bank
December 1 – Investment P850,000 – Financing December 3 – P150,000 – Laundry Equipment – Investing
17 – Bank Loan of P100,000 – Financing 10 - P4,000 – Payment of taxes – Operating
21 – Collection of P45,000 – Operating 12 -P10,000 – Withdrawal - Financing
17 -P1,000 – Payment of Interest – Operating
25 - P60,000 – Payment of Supp. – Operating
30 - P27,000 – Payment of Rent (P5,000), Utilities
(P12,000), Salary (P10,000 )

The cash ledger is shown above to explain how the cash balance became P743,000 at the end of the period.
The debit side would give you an idea of the sources of cash and the credit side gives you an idea of the uses
of cash. The difference between sources of cash in the amount of P995,000 and the uses of cash in the
amount of P252,000 in the cash balance at the end of the period, P743,000.

Lara Jean Repairs and Maintenance Service

Statement of Cash Flow
As of June 31, 2022

Cash Flows from Operating Activities:

Cash collections from customers P45,000
Payment of taxes and licenses (4,000)
Purchase of Repair Supplies (60,000)
Payment of Salaries (10,000)
Payment of rental (5,000)
Payment of utilities (12,000)
Payment of interest (1,000)
Net cash provided by (used in) operating activities (47,000)
Cash Flows from Operating Activities:
Purchases of repair equipment (150,000)
Net cash provided by (used in) investing activities (150,000)
Cash Flows from Financing Activities:
Cash received as an investment by owner 850,000
Cash received from bank loan 100,000
Payment for withdrawn by owner (10,000)
Net cash provided by (used in) financing activities 940,000
Net Increase (Decrease) in Cash 743,000
Add: Cash Balance at the beginning of the period -
Cash Balance at the end of the period P743,000
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 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

2) Activity 3: Skill-building Activities (with answer key) (18 mins + 2 mins checking)
Direction: Practice what you understand by answering the proceeding problem.

Presented below is the worksheet of Anna Mae Company.

Anna Mae Company

Unadjusted Trial Balance
December 31, 2022
Debit Credit
Cash 9,316
Accounts Receivable 1,690
Prepaid Insurance 1,200
Laundry Supplies 390
Laundry Equipment 4,400
Accounts Payable 3,990
Anna Mae, Drawing 800
Anna Mae, Capital 12,000
Laundry Service Revenue 300
Store Rent Expense 1,040
Utility Expense 154
Total 18,990 16,290

Adjustments:
1. Insurance Expense 100
Prepaid Insurance 100
To record the one-month expiration of prepaid insurance
2. Laundry Supplies Expense 196
Laundry Supplies 196
To record usage of repairs supplies
3. Depreciation Expense-Laundry Equipment 70
Accumulated Depreciation-Laundry Equipment 70
To record depreciation of Repair Equipment
4. Income Tax Expense 40
Income Tax Payable 40
To record provision for income tax
5. Uncollectible Accounts Expense 30
Allowance for Uncollectible Accounts 30
To record provision for uncollectible accounts

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 Anna Mae Company
Worksheet
As of December 31, 2022
Unadjusted Trial Adjusted Trial Statement of Financial Statement of
Adjustments
Account Titles Balance Balance Performance Financial Position
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 9,316 9,316 9,316
Accounts Receivable 1,690 1,690 1,690
Prepaid Insurance 1,200 (a) 100 1,100 1,100
Laundry Supplies 390 (b) 196 194 194
Laundry Equipment 4,400 4,400 4,400
Accounts Payable 3,990 3,990 3,990
Anna Mae, Capital 12,000 12,000 12,000
Anna Mae Withdrawal 800 800 800
Bicycle Repair Revenue 3,000 3,000 3,000
Store Rent Expense 1,040 1,040 1,040
Utility Expense 154 154 154
Total 18,990 18,990
Adjustments:
Insurance Expense (a) 100 100 100
Laundry Supplies Expense (b) 196 196 196
Depreciation Expense - Eqt (c) 70 70 70
Accumulated Dep’n - Eqpt (c) 70 70 70
Income Tax Expense (d) 40 40 40
Income Tax Payable (d) 40 40 40
Uncollectible Accts Exp. (e) 30 30 30
Allow. for Uncoll. Accts (e) 30 100 30
Total 436 436 19,130 19,130 1,630 3,000 17,500 16,130
1,370 1,370
3,000 3,000 17,500 17,500

1
FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Based on the worksheet prepared for Anna Mae Company, prepare the following financial statements.
Note not to forget the header for each statement.

1. Statement of Financial Performance

2. Statement of Changes in Owner’s Equity
3. Statement of Financial Position
4. Statement of Cash Flows

1
FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

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FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

3) Activity 4: What I Know Chart, part 2 (2 mins)

Accomplish What You Know NOW by referring to the third column of the Chart contained in your
Activity 1.

4) Activity 5: Check for Understanding (5 mins)

Direction: Classify the accounts below as permanent or temporary.
Answer:
1. Rent Expense
2. Prepaid Insurance
3. Accounts Receivable
4. Supplies Expense
5. Accumulated Depreciation – Equipment

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 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

A. LESSON WRAP-UP
1) Activity 6: Thinking about Learning (5 mins)
Let’s now shade the number of this module that you have finished.

b) Think about your learning by filling up your “My Learning Tracker” below. Write your learning targets,
your scores, and learning experience for this session and deliberately plan for our next learning
session.

Date Learning Target/Topic Scores Action Plan

What module# did you do? What What contributed to the quality of your performance today?
What’s the date What were your scores
were the learning targets? What What will you do next session to maintain your performance or
today? in the activities?
activities did you do? improve it?

FAQs
1. How accounts should be classified in the Statement of Financial Position?
- The revised accounting standard, PAS 1, does not prescribed the order of format in which
an entity presents items in the Statement of Financial Position. What is required is the
current and non-current distinction for assets and liabilities.

2. What is the importance and use of financial statements?

- Users of the financial statements analyze the balance sheet to evaluate an entity’s liquidity,
its financial flexibility, and it’s ability to generate profits, and it’s solvency.

3. Why is it important to present and prepare the statement of Cash Flow?

- The statement of cash flow reports the net increase or decrease in cash during the period
ends with the cash balance reported in the balance sheet. This statement is prepared based
on the information from the income statement and the balance sheet.

4
FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

KEY TO CORRECTION

Activity 3

Anna Mae Company

Statement of Financial Performance
For the Month Ending December 31, 2022

Revenues:
Bicycle Repair Revenue P 3,000
Total Revenue 3,000

Expenses:
Uncollectible Accounts Expense 30
Store Rent Expense 1040
Utility Expense 154
Insurance Expense 100
Repair Supplies Exp. 196
Depreciation Exp. 70
Income Taxes Exp. 40
Total Expenses 1,630
Net Income 1,370

Anna Mae Company

Statement of Changes in Owner’s Equity
For the Month Ending December 31, 2022

Owner's Equity, beginning P --

Anna Mae, Capital 12000
Add: Net Income 1,370
Subtotal 13,370
Less: Anna Mae, Withdrawal 800
Owner's Equity, December 31 P 12,570

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FLM 1.0
 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Anna Mae Company

Statement of Financial Position
For the Month Ending December 31, 2022

Current Assets
Cash 9,316
Accounts Receivable P 1,690
Less: Allowance for Uncollectible Accounts 30 1,660
Prepaid Insurance 1,100
Repair Supplies 194
Total Current Asset 12,270
Current Assets
Non Current Assets
Repair Equipment 4,400
Less: Accum. Depr. 70 4,330
Total Assets P 16,600

Liabilities and Owner’s Equity

Current Liabilities
Accounts Payable 3,990
Income Taxes Payable 40
Current Liabilities 4,030
Total Liabilities P 4,030
Owner’s Equity P 12,570

Total Liabilities & Owner’s Equity P 16,600

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 Course Code: ACC 102
Module #6

Name: _____________________________________ Class number: _________________

Section: _________ Schedule: _________________ Date: ________________________

Anna Mae Company

Statement of Cash flows
For the month Ending December 31, 2022

Cash Flow from Operating Activities:

Laundry Revenue P1,310.00
Prepayment of Insurance (1,200.00)
Payment of Store Rent (1,040.00)
Payment for utilities (154.00)
Payment for supplies purchased on account (200.00)
Net cash provided by (used in) operating activities (P1,284.00)

Cash Flow from Investing Activities:

Downpayment for Repair Equipment (600.00)
Net cash provided by (used in) investing activities (600.00)

Cash Flow from Financing Activities:

Initial Investment 12,000.00
Withdrawal by Anna Mae (800.00)
Net cash provided by (used in) financing activities 11,200.00
Net Increase (Decrease) in Cash 9,316.00
Add: Cash Balance at Beginning of the Period -

Activity 5

2. Temporary
3. Permanent
4. Permanent
5. Temporary
6. Permanent

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