Question

The ledger accounts of the Blue Spruce Gym at July 31, 2022, its first period of operations, are shown below: $12,900 1,150 Accounts Payable Accounts Receivable Buildings Common Stock Cash Equipment Notes Payable (due 2024) Supplies Dividends 56,700 65.900 8,700 46,300 45,000 450 10,500

Answer 1

Credit BLUE SPRUCE GYM Trial Balance July 31, 2022 Account Titles Debit Cash $8,700 Accounts Receivable $1,150 Supplies $450 Buildings $56,700 Equipment $46,300 Accounts Payable Notes Payable (Due 2024) Common Stock Dividends $ 10,500 Totals $123,800 $12,900 $45,000 $65,900 $123,800

Explanation: Accounting is a process of identifiying, classifying, categorizing, recording, grouping and presenting the business transactions in an understandable manner in accordance with applicable statutory provisions of the land. In case of management accounting, the term accounting is not required to follow statutory provisions but must concentrate on yielding end-results as required by the management for various business or operational decision purpose. After recording business transactions in general journal, every journal entry shall be posted to respective general ledgers affected by such journal entry. After balancing the general ledger accounts, accountant will prepare a statement called trial balance where ending balance of each ledger account will be listed in the order of liquidity starting with asset accounts first, followed by liability accounts followed by equity accounts followed by revenue accounts and then finally expense accounts. As each journal entry requires dual accounting entry such as one debit and one credit, trial balance helps to check arithmetic accuracy of postings made to general ledgers from journal entries. Arithmetically, total of debit side of the trial balance must match with total of credit side of the trial balance. Therefore, it helps to test the arithmetical accuracy of the ledger.