10-Column Worksheet: A Complete Accounting Example

A 10-column worksheet is an optional spreadsheet with five debit-and-credit column pairs: trial balance, adjustments, adjusted trial balance, income statement, and balance sheet. You update each account for period-end adjustments, then carry its balance to the income statement or balance sheet columns. The difference between the income statement columns is net income or net loss.

Suppose a store pays rent that covers part of next month and records the whole payment as rent expense. The worksheet lets you see three effects of the adjustment together: this month’s rent expense falls to the correct amount, a prepaid rent asset appears, and this month’s profit rises compared with the unadjusted figures. You can prepare the statements from those figures while the adjusting entries await posting. The ledger changes when the entries are recorded and posted.

What are the five column pairs in a 10-column worksheet?

Write the company name, the worksheet title, and the period at the top. List the ledger accounts down the left. The account-name column sits outside the ten amount columns. Dr. means debit, the left side of a pair. Cr. means credit, the right side. An account’s classification determines what a debit or credit does to its balance. Need a quick refresher? See debits and credits and normal balances.

How do you prepare a 10-column worksheet?

Here’s the full process in seven steps. The Juniper Stationery example below walks through every one of them with real numbers.

1. Write the heading. Enter the company name, the word “Worksheet,” and the period covered, such as “For the Month Ended March 31.”
2. Enter the unadjusted trial balance. Copy each ledger balance into the first pair and confirm the debit and credit totals match. Need a refresher? See the unadjusted trial balance.
3. Enter the adjustments. Record both sides of each adjustment in the second pair, label both sides with the same letter, and add a new row for any account that had no balance before.
4. Calculate each adjusted balance. Add amounts on the same side and subtract amounts on the opposite side. Enter the result in the third pair, then total both columns.
5. Extend each balance. Move revenues and expenses to the income statement pair. Move assets, contra accounts, liabilities, equity accounts, and dividends to the balance sheet pair.
6. Find net income or net loss. Total the income statement columns. If credits are larger, enter the difference as net income in the income statement debit column and the balance sheet credit column. If debits are larger, enter the net loss in the income statement credit column and the balance sheet debit column. Every pair should now balance.
7. Prepare the statements and record the entries. Use the worksheet to prepare the financial statements, then journalize and post the adjusting entries and closing entries in the ledger.

Enter seven period-end adjustments

Juniper Stationery, Inc. is a hypothetical retailer preparing its March worksheet. Its perpetual inventory records already show $3,200 of merchandise on hand and $4,100 of cost of goods sold. Assume the ending inventory count agrees with the records. In a perpetual inventory system, purchases update inventory, and each sale records cost of goods sold and reduces inventory. No adjustment for an inventory count difference is needed here because the physical count agrees with the recorded balance. The balances below are in dollars. New to adjusting entries? Start with the four types of adjusting entries, then practice with deferral adjusting entries (like prepaid rent and prepaid insurance) and accrual adjusting entries (like unpaid property taxes and earned interest).

Check each lettered adjustment against both affected account rows. Add a row when an adjustment creates an account that had no opening balance. For example, adjustment B creates Prepaid Rent and credits the existing Rent Expense row. Entering another rent payment here would reduce cash a second time.

A quick vocabulary note: credit loss expense is the name many current textbooks use for bad debt expense. Under FASB ASC 326, often called CECL (the current expected credit loss model), the allowance for credit losses reflects the receivables a company does not expect to collect. The allowance is a contra asset, so it carries a credit balance and reduces accounts receivable on the balance sheet. Accumulated depreciation works the same way for equipment.

Completed 10-column worksheet example

Read across the Prepaid Insurance row first. Its opening debit of $1,200 and the $100 credit adjustment leave a $1,100 debit. Now follow Interest Receivable. Its first amount is the $30 debit adjustment, which also becomes its adjusted balance. An account with no adjustment carries forward at its original balance.

On a narrow screen, scroll the table horizontally to follow an account across. A blank cell means there is no amount on that side.

Compare the first three pairs. Adjustments total $1,350 on each side, yet the adjusted trial balance increases by only $950 per side. Some adjustments reduce existing debit balances. Calculate the balance of each account first, then total the columns. Adding $1,350 to the bottom of the trial balance would give the wrong answer.

How do you prepare the financial statements from the worksheet?

Sales and interest revenue total $8,630. Subtract $6,020 of expenses, including cost of goods sold and income tax, to obtain $2,610 of net income. The worksheet shows that amount twice on its balancing row. For the reason each amount appears on its particular side, see where net income or loss goes on a worksheet.

Ending retained earnings are $2,000 beginning retained earnings + $2,610 net income − $400 dividends = $4,210. On the formal balance sheet, total assets are $22,260 after deducting the allowance for credit losses and accumulated depreciation. Liabilities of $3,050 plus common stock of $15,000 and retained earnings of $4,210 also total $22,260. The $22,930 debit total in the worksheet’s balance sheet columns is larger for two reasons. It includes the $400 of dividends, which are not an asset. It also shows equipment and receivables at their full amounts, because the two contra accounts sit in the credit column of the same pair. A contra account is an account that reduces a related account, like accumulated depreciation reducing equipment. In numbers: $22,930 − $400 dividends − $150 accumulated depreciation − $120 allowance = $22,260 of total assets. Use these classified balances (balances grouped as assets, liabilities, and equity) to prepare the statement. For full statement layouts, see preparing financial statements from an adjusted trial balance.

Key takeaways and common mistakes

• A 10-column worksheet has five debit-and-credit pairs: trial balance, adjustments, adjusted trial balance, income statement, and balance sheet.
• The worksheet is optional and does not change the ledger. The adjusting entries still need to be journalized and posted.
• In the Juniper example, revenues of $8,630 minus expenses of $6,020 give net income of $2,610.
• Ending retained earnings are $2,000 + $2,610 − $400 = $4,210.
• The worksheet’s $22,930 column total differs from the $22,260 of total assets because of dividends and contra accounts.

Watch out for these common mistakes:

• Adding the adjustment totals to the trial balance totals instead of calculating each account’s balance first.
• Moving dividends to the income statement columns. Dividends are not an expense.
• Putting accumulated depreciation or the allowance for credit losses in the balance sheet debit column. Contra assets carry credit balances.
• Entering net income on the wrong side. It goes in the income statement debit column and the balance sheet credit column.
• Assuming equal totals prove the worksheet is right. An adjustment left off both sides still balances.

Practice questions and answers

Frequently asked questions

Is a worksheet required to prepare financial statements?

A worksheet is optional. It offers a convenient place to sort accounts and review adjustments. A company can also prepare its statements from its adjusted ledger balances.

Does completing the worksheet record the adjusting entries?

The worksheet documents the proposed debits and credits. The accountant still journals and posts those adjustments and completes the closing process in the accounting records.

For those final steps, see closing entries and the post-closing trial balance.

What is the difference between a trial balance and a 10-column worksheet?

A trial balance lists every account balance at one point in time and checks that debits equal credits. A 10-column worksheet starts with that trial balance and adds four more pairs of columns, so you can see the adjustments, the adjusted balances, and the income statement and balance sheet split all in one place.

Where does net income go on a 10-column worksheet?

Net income goes in the income statement debit column and the balance sheet credit column, which makes both pairs balance. A net loss goes in the opposite columns: the income statement credit column and the balance sheet debit column. For a closer look, see where net income or loss goes on a worksheet.

Why do dividends go in the balance sheet columns?

Dividends are a distribution to owners, not an expense, so they stay out of the income statement columns. They sit in the balance sheet debit column because beginning retained earnings, net income, and dividends together make up ending retained earnings. In the Juniper example, that’s $2,000 + $2,610 − $400 = $4,210.

For another view of the five column pairs, see the ten-column worksheet discussion in OpenStax, Principles of Accounting, Volume 1: Financial Accounting (section 4.5).

About the author

Mansour Farhat, CPA, CIA, DBA, is the instructor behind Farhat Lectures. He teaches the accounting courses and exam review lessons on this site and on the Farhat Lectures YouTube channel, including the 10-column worksheet video above. Read more about Professor Farhat.