Trial Balance, Trading account, Balance sheet examples

 Trial Balance 

The trial balance is an accounting report that lists the balances in each of an organization’s general  ledger account. A trial balance is a worksheet with two columns, one for debits and one for credits,  that ensures a company’s bookkeeping is mathematically correct. Debits and credits of a trial  balance being equal ensure there are no mathematical errors, but there could still be mistakes or  errors in the accounting systems. The following table is an example of trial balance. 

1. The Trial Balance of a trader as on Chaitra 31st 2075 is given below: 

Particular	Amount	Amount
Machinery  Bank balance  Opening stock  Purchases  Capital  Sales  Return inward  Debtors  Creditors  Freight on purchase  Office salaries  Wages  Insurance  Overdraft  Rent  Interest on overdraft  Advertisement  Purchase return	1,50,000  4,50,000  1,50,000  8,00,000  30,000  1,20,000  20,000  1,70,000  30,000  20,000  1,20,000  10,000  30,000	6,00,000  12,50.000  70,000  1,60,000  20,000

Total 21,00,000 21,00,000

Adjustments: 

i. Depreciate machinery @ 10% ii. Prepaid insurance Rs. 5,000 iii. Interest due on overdraft Rs. 6,000 iv. Closing stock Rs. 2,80,000 v. Create provision for doubtful debts. 2.5% on debtors. 

Required: a. Trading Account b. Profit and loss Account c. Balance sheet as at 31st, 2075 

a. Trading Account 

Trading account is a statement which is prepared by business firms. It is a part of the final accounts of  the entity. In a trading account we can find gross profit and gross loss. Trading account shows the  total sales, total purchase and direct expenses related to sales. Following table is an example of a trading account. 

i. Trading Account 

Dr For the year end Chaitra 31, 2075 Cr

Particular	Amount	Particular	Amount
To Opening stock ...……….. To Purchase ………8,00,000 Less: Purchase return 20,000 To wages ………………….. To Fight on purchase ……… To Return inward …………. To Gross profit c/d ………...	1,50,000  7,80,000  30,000  20,000  30,000  5,20,000	By Closing stock ...………... By Sales ...………………….	2,80,000  12,50,000
	15,30,000		15,30,000

b. Profit and loss Account 

Every company prepares a profit and loss account at the end of year. It is important to prepare a Profit and Loss statement because this information helps an organization to make the right  business decision like where should we do the cost-cutting, from where can a business generate  more profit and in which part business is suffering the loss. While we prepare a Profit and loss  account to ascertain the Net profit/ Net loss. Following is the example of the profit and loss  account. 

ii. Profit and Loss Account 

Dr For the year ending 31st Chaitra, 2075 Cr

Particular	Amount	Particular	Amount
To Office salaries …………... To Insurance…………20,000 Less: Prepaid insurance 5,000 To Rent …………………….. To Interest on overdraft ……. To Advertisement ………….. To New provision for bad   debts 2.5% …………………. To Depreciation on Machinery  10%…………………………. To Interest Due …………….. To Net profit c/d……………..	1,70,000  15,000  1,20,000  10,000  30,000  3,000  15,000  6,000  1,51,000	By Gross profit b/d ………...	5,20,000
	5,20,000		5,20,000

c. Balance sheet 

Preparing the final account balance sheet is the last stage of the accounting cycle. It helps to determine  the financial position of a business at the end of the financial as well as the accounting year. A balance  sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity. The balance sheet displays the company’s total assets, and how these assets are financed, through  either debt or equity. The following table is an example of a balance sheet. 

iii. Balance Sheet 

As on 31st Chaitra, 2075 

Liabilities	Amount	Assets	Amount
Share capital ……………….. Secured loan:  Current Liabilities:  Creditors …………………… Overdraft …………1,60,000 Add: Due …………… 6,000  Net profit	6,00,000  70,000  1,66,000  1,51,000	Fixed costs:  Machinery …………...1,50,000 Less: Depreciation ….....15,000  Investment:  Current Assets:  Bank balance …………………. Closing stock …………………. Debtors ………………1,20,000 Less: Provision for bad debt   ……………………………3000  Loan and advance:  Prepaid insurance  Miscellaneous:	1,35,000  4,50,000  2,80,000  1,17,000   5,000
	9,87,000		9,87,000

Thank You

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