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    Working Trial Balance

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    Below, find a working trial balance for the Smith Company.

    Smith Company


    Trial Balance (accounts in alphabetical order)

    Debit Credit
    Accounts payable 67,000
    Accounts receivable 24,500
    Cash 16,700
    Common stock 10,000
    Depreciation expense 24,350
    Cost of goods sold 234,000
    Equipment (net of depreciation) 316,000
    Insurance 1,400
    Inventory 25,000
    Long-term debt 145,000
    Marketing 4,500
    Paid-in capital 90,000
    Property taxes 8,900
    Rent 18,000
    Retained earnings ???
    Revenues 406,000
    Salaries 67,500
    Utilities 6,700

    Total 747,550 718,000

    Prepare an income statement and a balance sheet in good format based on the trial balance below. Calculate Financial ratios and comment on what they mean for the business.

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    Solution Preview

    Liquidity Measurement Ratios Formulae
    Current Ratio 0.99 Current Assets / ...

    Solution Summary

    This solution includes the preparation of the balance sheet and income statement from a trial balance, and calculates liquidity, profitability and debt ratios. An Excel file is included to provide clarity and understanding of ratio calculations.