Balance
Sheet
Also called a statement of financial position, a balance
sheet is a financial "snapshot" of your business at a
given date in time. It lists your assets,
your liabilities,
and the difference between the two, which is your owner's
equity, or net worth. The accounting
equation (assets = liabilities + owner's equity) is the
basis for the balance sheet.
The balance sheet is prepared after all adjusting
entries are made in the general
journal, all journal entries have been posted
to the general
ledger, the general ledger accounts have been footed
to arrive at the period end totals, and an adjusted trial
balance is prepared from the general ledger amounts.
Financial statements normally do not show cents. All amounts
should be rounded to the nearest dollar.
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You are getting ready to close the books for
the year ended December 31, 2002. You post
totals from the journals to the general ledger,
and foot the general
ledger accounts. Then you prepare the following
preliminary trial balance, using the balances
from your general ledger accounts.
Beta Service Company
Preliminary Trial Balance
December 31, 2002
|
|
|
Debit |
Credit |
Cash in bank |
3,423 |
|
Accounts receivable |
11,400 |
|
Equipment |
42,900 |
|
Accumulated depr. equip. |
|
29,500 |
Buildings |
119,000 |
|
Accumulated depr. build. |
|
17,950 |
Land |
80,000 |
|
Accounts payable |
|
2,213 |
Payroll taxes payable |
|
2,567 |
Mortgage payable |
|
135,812 |
Capital |
|
59,823 |
Drawing account |
24,000 |
|
Sales |
|
332,462 |
Advertising |
18,900 |
|
Depreciation |
16,760 |
|
Insurance |
4,500 |
|
Interest expense |
12,421 |
|
Payroll taxes |
16,233 |
|
Property taxes |
4,989 |
|
Repairs and maintenance |
23,430 |
|
Utilities |
3,856 |
|
Wages |
198,515 |
|
|
580,327 |
580,327 |
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A
trial balance spreadsheet can be found in
the Business Tools area. It is an
Excel 4.0 spreadsheet template, so you can use
the template as a starting point for your own
trial balance.
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What if your trial balance does not balance? In other words,
what if total debits don't equal total credits? This shouldn't
surprise or discourage you. In fact, it might be more surprising
if it does balance. Accounting errors happen. Even
experienced bookkeepers normally have to find
trial balance errors.
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