hard · Financial Accounting accounting-cycle-financial-statements

A company prepares a worksheet. The adjusted trial balance shows total debits of $820,000 and total credits of $820,000. When the amounts are extended, the Income Statement columns total $310,000 (debit) and $360,000 (credit), and the Balance Sheet columns total $510,000 (debit) and $460,000 (credit).

What does this pattern indicate, and what is the period's result?

  1. A $50,000 net loss; the income-statement debit total exceeds its credit total, which is balanced by the larger balance-sheet credit column.
  2. A $50,000 net income; the income-statement credit total exceeds its debit total, and the balancing figure is added to the balance-sheet debit column.
  3. A worksheet error of $50,000, because the income-statement and balance-sheet column pairs do not internally balance to equal amounts before the net figure is entered.
  4. A $50,000 net income; the balancing figure is added to the balance-sheet credit column to make both statement sections balance.

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