Layout of the Balance Sheet
A balance sheet could be presented in two ways:
- T-format
- Vertical format
T- FORMAT
BALANCE SHEET AS AT 31ST DECEMBER, 2000
VERTICAL FORMAT
BALANCE SHEET AS AT 31ST DECEMBER, 2000
Preparation of balance sheet
A hypothetical question is used to demonstrate the preparation of balance sheet thus:
The trial balance of James Peters as at 30th June, 2012 was as follows:
Stock at close was N50, 000.
Prepare:
- Trading, Profit and Loss Account for the year ending 30th June 2012
- Balance Sheet as at that date.
Solution prepared using T- format
James Peters
Trading, Profit and Loss Account for the year ending 30th June, 2012
Balance Sheet as at 30th Dec. 2012.
NECESSARY ADJUSTMENTS:
CLOSING STOCKS
In the trading account, closing stock shall be deducted from the cost of goods available for sale to obtain the cost of goods sold which in turn shall be deducted from sales to obtain the gross profit.
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