At the bottom of the form, trading and net profits are extended as a memorandum only. Since no inventory has been taken these figures are not exact, but represent approximate results on the supposition that the inventory would be practically the same as when the last inventory was taken. Of course, if there was a noticeable change in the quantity of merchandise in stock, an estimate would be made and taken into consideration in making this statement of probable profits. EXERCISE From the following trial balance, prepare a working balance sheet showing actual gross and net profits. TRIAL BALANCE Bank $8,460.00 Capital Stock $25,000.00 Sales 11,201.00 Purchases 10,000.00 Returns and Allowances 400.00 Interest and Discount earned 260.00 General Expense 425.00 Salaries 360.00 Rent 300.00 Taxes and Insurance 37.60 Selling Expense 421.00 Inventory (Jan. 1st) 8,864.00 Fixtures 2,500.00 Accounts Receivable 5,680.00 Accounts Payable 1,274.00 Cash in Office 287.40 --------- --------- 37,735.00 37,735.00 Inventory (Feb 1) 9,650.00 COMPARATIVE STATEMENTS =16.= The trial balances shown in the preceding pages illustrate some of the advantages of properly classified accounts. The information gained can be made of still greater value by the construction of comparative statements; for, as has been stated, the chief value of many of the figures shown lies in the opportunity for comparisons. Statements which permit of comparison of items of a like nature from month to month furnish a valuable survey of the progress of the business. The following is a trial balance taken from the books of a manufacturing business, and will be used as a basis for the construction of comparative statements. TRIAL BALANCE