| TRIAL BALANCE | ||
|---|---|---|
| Assets | ||
| Cash | $264.20 | |
| Bank | 4,728.50 | |
| Accounts Receivable | 6,270.00 | |
| Inventory (Jan. 1) | 7,860.00 | |
| Real Estate | 10,000.00 | |
| Furniture and Fixtures | 5,000.00 | |
| Liabilities | ||
| Mortgage Payable | $3,000.00 | |
| Bills Payable | 5,000.00 | |
| Accounts Payable | 6,120.00 | |
| Capital Stock | 20,000.00 | |
| Profit and Loss | ||
| Advertising | 475.00 | |
| Salesmen's Salaries | 300.00 | |
| Traveling Expenses | 189.70 | |
| General Expense | 74.00 | |
| Interest and Discount | 22.60 | |
| Building Maintenance | 37.00 | |
| Taxes and Insurance | 42.00 | |
| Salaries | 525.00 | |
| Trading | ||
| Purchases | 5,500.00 | |
| In-Freight and Cartage | 96.20 | |
| Sales | 7,219.00 | |
| 41,361.60 | 41,361.60 | |
If the accounts in this trial balance were listed without regard to the groups in which they belong, it would merely show that the ledger balances. In its present form, it gives at a glance much valuable information. Total expenses and expenses of each class are readily ascertained, sales are shown, and expenses can be compared with sales. With the exception that it does not show the changes in the account of the inventory, this trial balance exhibits the condition of the business.
Supposing that an inventory is taken, the following statements are quickly prepared.
| BALANCE SHEET | ||
|---|---|---|
| Assets | ||
| Cash | $264.20 | |
| Bank | 4,728.50 | |
| Accounts Receivable | 6,270.00 | |
| Inventory (Feb. 1) | 7,995.00 | |
| Real Estate | 10,000.00 | |
| Furniture and Fixtures | 5,000.00 | |
| Liabilities | ||
| Mortgage Payable | $3,000.00 | |
| Bills Payable | 5,000.00 | |
| Accounts Payable | 6,120.00 | |
| Capital Stock | 20,000.00 | |
| Surplus | 137.70 | |
| 34,257.70 | 34,257.70 | |
| TRADING STATEMENT | ||
| Inventory (Jan. 1) | 7,860.00 | |
| Purchases | 5,500.00 | |
| In-Freight | 96.20 | |
| 13,456.20 | ||
| Less Inventory (Feb. 1) | 7,995.00 | |
| 5,461.20 | ||
| Sales | 7,219.00 | |
| Gross Profit | 1,757.80 | |
| 7,219.00 | 7,219.00 | |
| PROFIT AND LOSS STATEMENT | ||
| Gross Profit | $1,757.80 | |
| Advertising | $475.00 | |
| Salesmen's Salaries | 300.00 | |
| Traveling Expenses | 189.70 | |
| General Expense | 74.00 | |
| Interest and Discount | 22.60 | |
| Building Maintenance | 37.00 | |
| Taxes and Insurance | 42.00 | |
| Salaries | 525.00 | |
| Net Profits | 137.70 | |
| 1,780.40 | 1,780.40 | |
The facts that sales were $7,219.00, or that the expense for salesmen's salaries was $300.00 mean nothing in themselves. It is only when compared that they exhibit vital facts. If we find that last month's sales were $8,400.00 and salesmen's salaries the same as this month, we know at once that our present selling cost is proportionately higher than during the preceding period.
The following trial balance should be compared with the preceding and the difference in their values, in respect to the information given, carefully noted. The accounts in this trial balance are arranged in the order in which they were found in the ledger.
| TRIAL BALANCE | ||
|---|---|---|
| Dr. | Cr. | |
| Capital Stock | $30,000.00 | |
| Sales | 45,411.40 | |
| Accounts Receivable | $7,190.00 | |
| Accounts Payable | 2,720.00 | |
| General Expense | 727.00 | |
| Salesmen's Salaries | 3,000.00 | |
| Salaries, General | 3,600.00 | |
| Interest and Discount | 126.70 | |
| Returns and Allowances | 942.20 | |
| Inventory | 9,687.00 | |
| Purchases | 26,250.00 | |
| In-Freight | $396.40 | |
| Bank | 6,470.00 | |
| Traveling Expense | 1,759.00 | |
| Taxes and Insurance | 236.50 | |
| Real Estate | 25,000.00 | |
| Fixtures | 3,000.00 | |
| Surplus | 10,000.00 | |
| 88,258.10 | 88,258.10 | |
Fig. 15-a. Working Balance Sheet