Dr. Cr. Cash in Office $162.50 Bank 8,500.00 Accounts Receivable 7,500.00 Bills Receivable 4,500.00 Inventory, Materials (Jan. 1) 9,500.00 Inventory, Manufactured Goods (Jan. 1) 6,000.00 Real Estate 20,000.00 Machinery and Tools 17,500.00 Furniture and Fixtures 3,500.00 Bills Payable $7,000.00 Accounts Payable 5,000.00 Capital Stock 50,000.00 Surplus 10,000.00 Undivided Profits 900.00 Advertising 1,200.00 Salesmen's Salaries 1,000.00 Salesmen's Expenses 720.00 General Expense 430.00 Interest and Discount 97.50 Salaries Administrative 900.00 Factory Expense 850.00 Factory Labor 1,750.00 Repairs to Machinery 150.00 Depreciation 175.00 Taxes and Insurance 25.00 Material Purchases 4,600.00 In-Freight and Cartage 126.00 Sales 16,491.00 Returns and Allowances 400.00 --------- --------- 89,488.50 89,488.50 --------- --------- In Fig. 16 _a._ is shown a working balance sheet in which the accounts as found in the trial balance are segregated in the four groups, _Manufacturing, Trading, Profit and Loss_, and _Balance Sheet_. First, the trial balance is entered in the two columns at the left. Next, the manufacturing account is made up by extending the inventory of material at end of preceding period, the manufacturing expense accounts, material purchases and freight on same. This gives the total charges to manufacturing account, but not the month's expenditures, for the present inventory of material must be considered. An inventory shows the value of material in stock to be $4,550.00. Deducting this leaves $12,626.00, the total operating cost for the month. To find the cost of goods completed during the month an inventory is taken of work in process, the amount is deducted from the total operating cost and the result, $9,126.00, represents cost of goods manufactured. The trading account is now made up, this $9,126.00 taking the place of purchases, and the gross profit is carried to profit and loss account.