27. Wages. It will be remembered that each department was debited with its share of all labor charges incurred during the month. These “accrued wages” are credited to this account in the Ledger. Debit this account with the total of the Labor column on the credit side of the cash book. Any credit balance remaining (as when part of the pay due an employee is held back) is a liability against the Exchange.
28. Profit and Loss. This account is ordinarily posted only upon closing the books. To this account, we post the balances of all those Ledger accounts which show a profit or a loss to the Exchange. These include all departmental accounts and also accounts numbered 14 to 29, inclusive, except Nos. 15, 21, 23, 24, 25, 26 and No. 28, which is now under discussion. Remember that each of these accounts which shows a debit balance is a loss and each that shows a credit balance is a profit or gain. After all of these accounts have been balanced and brought into Profit and Loss, the latter is balanced and the balance transferred to Post Exchange. Before this last named operation is performed, however, a trial balance should be taken, because, for reasons before explained, the books will never balance to the cent, and the entry of a small item, usually “income not otherwise accounted for,” is necessary in this account before the books will balance.
29. Maintenance. This is really in the nature of an expense account and we should debit it with the amounts shown on the credit side of the cash book as paid out on this account. Credit this account for such items as can be and are debited against any of the departments (see 12 d); credit this account for the balance remaining at the end of the month and charge same against Profit and Loss.
Balancing the Ledger.
It has been stated above, that all “Expense” accounts are balanced monthly and posted to Profit and Loss, and that after a trial balance has proved the Ledger to be in balance, the balance of the Profit and Loss account is transferred to the “Post Exchange” account. The remaining accounts, Nos. 1-11, inclusive, etc., represent assets and liabilities and are not transferred at all, although they are balanced every month.
We now come to the book-keepers’ bug-a-boo, the “Trial Balance”. This is a simple thing (to describe), consisting merely going through our ledger, taking the total of all the totals on the credit side of all our ledger accounts and seeing if this equals the total of all the totals on the debit side. If these totals do not agree, the book-keeper must run down the error and correct it. There are no rules for this procedure that would be of practical benefit. This trial balance does not necessarily mean that the ledger is correct, it simply proves that for every debit item entered a corresponding credit entry has been made; it does not prove that these entries have been made in the proper accounts.
A sample trial balance sheet, worked out by Mr. Parker, cashier of the Fort Slocum Exchange, is shown herewith.
After the ledger is balanced, we proceed to get out our monthly statement. If it is a case of an inspector, we can get all the data he needs by simply taking our statements since his last visit and combining the results shown by same.
| ACCOUNTS | Trial Balance | Balance of Balances | Loss & Gain | Assets and Liabilities | Cash Statement | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | |
| Post Exchange | 336.50 | |||||||||
| Cash | 555.60 | 372.00 | 183.50 | 183.50 | ||||||
| Bills Rec. Charge Accts | 11.62 | 1.62 | 10.00 | 10.00 | ||||||
| ” ” E. M. Laundry | 16.00 | 16.00 | 16.00 | |||||||
| ” ” Credit Coupons | 100.00 | 100.00 | 100.00 | |||||||
| Bills Pay Merchandise | 4.00 | 4.00 | 4.00 | |||||||
| ” ” Check Account | 90.00 | 100.00 | 10.00 | 10.00 | ||||||
| Stock Room | .50 | .50 | ||||||||
| Athletics | 20.00 | 20.00 | 20.00 | 20.00 | ||||||
| Fixtures | 21.00 | 21.00 | 21.00 | 21.00 | ||||||
| Store | 11.50 | 280.55 | 269.05 | 269.05 | 250.00 | 11.00 | ||||
| Lunch | 67.72 | 211.27 | 204.55 | 204.55 | 170.00 | 6.00 | ||||
| Pool | 50.00 | 9.00 | 41.00 | 41.00 | 8.00 | 50.00 | ||||
| Barber | 67.00 | 17.00 | 50.00 | 50.00 | 14.00 | 67.00 | ||||
| Tailor | 46.65 | 59.00 | 12.35 | 12.35 | 46.00 | 43.00 | ||||
| Shoeshop | 35.75 | 35.00 | .50 | .05 | 29.00 | 35.00 | ||||
| Soda Fountain | 37.00 | 3.00 | 34.00 | 34.00 | 3.00 | 37.00 | ||||
| Skating | 14.50 | 4.60 | 9.00 | 9.90 | 4.60 | 14.00 | ||||
| Moving Pictures | 10.00 | 31.00 | 21.00 | 21.00 | 31.00 | 10.00 | ||||
| Laundry | 29.00 | 22.00 | 7.00 | 7.00 | 29.00 | |||||
| Interest and Discount | 17.60 | 17.60 | 17.60 | 17.00 | ||||||
| Office | 11.00 | 11.00 | 11.00 | 11.00 | ||||||
| Loss and gain | 336.50 | |||||||||
| TOTALS | 1151.44 | 1151.44 | 521.00 | 521.00 | 507.00 | 507.00 | 350.50 | 350.50 | 555.60 | 372.10 |
| 183.50 | ||||||||||
| Balance | 555.60 | 555.60 | ||||||||