SAMPLE TRANSACTIONS

84. At the end of the first year, the trial balance of a single proprietorship was as follows:

Debit Balances
Bank Account$764.20
Sundry Open Accounts Receivable 1,127.30
Bills Receivable475.00
Furniture and Fixtures325.00
Cash in Office68.50
Purchases9,571.40
Expense675.00
Discount on Sales96.75
Interest72.10
————
13,175.25
Credit Balances
Proprietor (Investment) 2,500.00
Bills Payable2,000.00
Sundry Accounts Payable1,761.60
Sales6,913.65
————
$13,175.25

The inventory at the end of the year was $4,962.30; at the beginning of the year, there was no merchandise in stock. The books are to be closed into trading and profit and loss, and a balance sheet prepared.

When closing the books, all entries necessary to adjust the balances of ledger accounts should be made through the journal. When an audit is made, it is difficult to trace the entries unless they are plainly stated in one group, which is provided when they are made in the journal. The making of entries in the ledger directly, also increases the opportunity for fraudulent entries. Never make original entries in the ledger.

EXAMPLE FOR PRACTICE

From the following trial balance prepare trading account; profit and loss account; and balance sheet.

Trial Balance
Proprietor (Investment) $7,600.00
Bills Payable 4,000.00
Accounts Payable1,470.00
Bank$1,262.84
Accounts Receivable 2,693.11
Bills Receivable4,360.00
Merchandise Inventory6,277.76
Furniture and Fixtures750.00
Purchases7,105.78
Expense1,416.30
Discount on Sales112.65
Interest 44.20
Sales10,985.70
Cash121.46
——————————
$24,099.90 $24,099.90
Inventory at end of year $6,493.06.