Fundamentals of Accountancy, Business, &

Management 1
Name: _____________________________ Grade: ______________
Date: ______________________________ Score: ______________

CONTEXTUALIZED LEARNING ACTIVITY SHEET

Quarter 2 – Week 1b: Completing the Accounting Cycle

I. Most Essential Learning Competencies (MELCs):

1. Complete the accounting cycle

Hi there! We will now delve deeper into the preparation of

adjusting entries and the completion of the accounting
cycle. In this contextualized learning activity sheet, you will
be able to apply what you have learned from your modules
in Fundamentals of ABM 1. Are you ready? Let’s start!

II. Background Information for Learners

Preparation of Adjusted Trial Balance

An adjusted trial balance is a listing of accounts after adding or

subtracting the adjustments made for the period.

Before adjusted trial balance is made, the adjustments made for the
period must be recorded in the adjustment column of the worksheet.
 We will transfer this information to a worksheet. A worksheet is a tool
used to show the movements of accounts after adjustments and the position of
each account in the financial statements.

How to transfer the above information to the worksheet? Here’s how:

1. Transfer the accounts of the Trial Balance and enter their balances to
the first two columns of the Work Sheet.
2. Post the adjusting entries to the third and fourth column or the
Adjustments column.
3. Prepare the adjusted trial balance by forwarding the balances of each
account on the fifth and sixth column or Adjusted trial balance
column. Add the amount of each account under trial balance column
and the amount under adjustment column if they are both debit or
both credits and enter their sum under adjusted trial balance.
Subtract the two if they are not the same debit or the same credit and
enter their difference under the adjusted trial balance column on the
side of the greater value.
 Preparing adjusted trial balance is just like preparing a trial balance. From
the worksheet, we can prepare a more presentable adjusted trial balance like the
following:

Step 7: Preparing the Financial Statements

Financial statements are statement that shows the information

about the assets, liabilities, capital, revenue, and expenses of the business.
These statements may help the users to make economic decision.

The following are the five financial statements:

2. Statement of
1. Statement of
Comprehensive 3. Statement of
Financial
Income or Changes in
Position or
Income Equity
Balance Sheet
Statement

5. Notes to
4. Statement of
Financial
Cash Flows
Statements
Statement of Comprehensive Income

• A statement of comprehensive income or income statement is a statement

shows the company’s revenues and expenses for the period.
• We can illustrate the income statement directly from the adjusted trial
balance and the income statement itself. The income statement directly from
the adjusted trial balance is done by transferring the amount of revenues and
expenses to seventh and eighth column of the worksheet.
Statement of Changes in Owner's Equity

• The Statement of Changes in Equity is a reconciliation of the beginning and

ending balances in a company’s equity during the accounting period. The
net income and the additional capital should be added to the initial capital
while withdrawals and net loss are deducted get the ending capital.

Statement of Financial Position or Balance Sheet

• The Statement of Financial Position or Balance Sheet is a statement that

shows the balances of the assets, liabilities and owner’s equity accounts.
We can also illustrate the balance sheet using the work sheet.
• There are two types of balance sheet, the account form and report form.
Step 8: Preparing the Closing Entries

A closing entry are journal entries where nominal accounts

(revenues and expenses) and drawing account are closed and transferred
their amount in Income Summary account and closed Income Summary to
Capital account.

Steps of Preparing Closing Entries

1. Close the revenue account and transfer to Income Summary account.

2. Close all expense account and debit to Income Summary account.

3. Close the Income Summary account and credit the capital account.
• Note: To compute for the Income Summary balance, just get the difference
between P118,000 and P40,250 and you will get credit Income Summary for
77,750(Since credit amount is greater than debit amount). To close it, you need
to debit Income Summary and credit Ms. Co, Capital.
 4. Close the Drawing account and credit the capital account.

Step 9: Preparing the Post-Closing Trial Balance

A post-closing trial balance is the listing of real accounts after

preparing closing entries. Post-closing trial balance is prepared by
transferring the balances of assets, liabilities, and capital to the trial
balance.

Step 10: Prepare Reversing Journal Entries

A reversing journal entry is a set of journal entries that are opposite

of the adjusting entries made for prepayment under the expense method,
pre-collections under the revenue method, accrued expenses and accrued
income. They are made at the beginning of the next accounting period.

To illustrate, let’s go back to the adjusting entries of ABM ACCOUNTING FIRM and
we will find out which of the adjusting entries need to prepare reversing entry:
As a summary, whole accounting cycle has the following steps:

1. Analyzing business transaction

2. Recording business transactions to the journal

3. Posting the journal entries to the ledger

4. Preparing the trial balance

5. Journalizing and posting the adjusting entries

6. Preparing the adjusted trial balance

7. Preparing the financial statements

8. Journalizing and posting closing entries

9. Preparing post-closing trial balance

10.Preparing reversing journal entries

III. Activities
I. Complete the statement to make it correct. Write the word or words on the
space provided before the item number.

__________________ 1. A _________ is a tool used to show the movements of

accounts after adjustments and the position of each
account in the financial statements.
__________________ 2. Transfer the accounts titles of the trial balance and enter
their balances on the _________ of the work sheet.
__________________ 3. _________ the amount of each account, under the trial
balance column and the amount under adjustment
column if they are both debit or both credit.
__________________ 4. A _________ is a statement shows the company’s revenues
and expenses
__________________ 5. _________ is a reconciliation of the beginning and ending
balances in capital.
__________________ 6. In closing entries, debit the revenue account and credit
_________ account.
__________________ 7. To close the expense, debit the income summary account
and credit _________ account.
__________________ 8. The first step in the accounting cycle is _________.
__________________ 9. The fourth step is _________.
__________________ 10. The tenth and last step in the accounting cycle is
_________.

II. CLOSING ENTRIES: Presented below is the adjusted trial balance of Ping
Dot Co.
Ping Dot Co.
Trial Balance
December 31, 2016

Cash Php 200,000

Accounts Receivable 80,000
Supplies 15,000
Prepaid Insurance 55,000
Delivery Equipment 359,000
Accumulated Depreciation – Delivery Php 25,400
Equipment
Accounts Payable 101,000
Unearned Income 97,000
P, Capital 386,600
P, Drawing 120,000
Delivery Income 390,000
Supplies Expense 62,000
Insurance Expense 25,000
Salaries Expense 70,000
Utilities Expense 14,000
1,000,000 1,000,000
Requirements:
1. Prepare the closing entries (5 points each):
a. Income
b. Expenses
c. Income Summary
d. Drawing Account

2. Prepare the T accounts for the closed entries (10 points).

Write your answers below: