Page 87 - Microsoft Word - 00 BA3 IW Prelims STUDENT.docx

From trial balance to financial statements

Illustration 1 (cont.)

The ledger will now look like this:

Cash
Dr $ Cr $
01-May Capital 20,000 02-May Bank 15,000
12-May Sales 210 07-May Wages 60
25-May Sales 430 22-May Purchases 3,900
28-May Sales 890 24-May Fittings 600
25-May Wages 110
30-May Drawings 100
31 May Balance c/d 1,760
–––––– ––––––
21,530 21,530
1 June Balance b/d 1,760

Note that this also illustrates that for a ledger account balance that will be
included in the statement of financial position, the closing balance at the end of
one accounting period is carried down to be the opening balance at the start of
the next accounting period.

If the procedure is followed in relation to the sales account, the result will be:

Sales
Dr $ Cr $
12-May Cash 210
19-May SP 580
25-May Cash 430
28-May Cash 890
29-May KM 8,090
––––––
10,200

Note that for an account that will be closed off to the statement of profit or loss,
the account balance is simply totalled so that the ledger account balance can
be included in the trial balance. There is no bal c/d or bal b/d for statement of
profit or loss ledgers.

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