In this trial balance, adjustments are made to initial balance to all the required accounts. Adjustments are made to an initial trial balance to bring the financial statements into compliance with GAAP (Generally Accepted Accounting principles) or IFRS (International Financial Reporting Standards). The adjusted trial balance is an internal report.Main purposeThe main purposes of the adjusted trial balance are as follows −Verification of total debt balances to credit balances of all accounts.To construct an income statement, statement of cash flow and balance sheet.Monitors the company's performance.It makes sure the entries are made correctly.It is used as an internal document only ... Read More

Refer the following data to prepare the trial balance −Books of accountsParticularsAmount (in rupees)ParticularsAmount (in rupees)ParticularsAmount (in rupees)Cash in hand6000Sales257000Rent2500Cash at bank300000Purchases50000Drawings18000Sundry debtors25000Carriage inwards2500Stock12000Sundry creditors18000Salaries20000Capital A/c190000Bills receivables28000Marketing expenses3000Furniture's and fixtures6500Bills payable10000Insurance paid1500SolutionThe trial balance is given below −      XYZ ltd31/03/2009 Sl.NoAccount TitleBalancedebitCredit1Cash in hand60002Cash at bank3000003Sundry debtors250004Sundry creditors180005Bills receivables280006Bills payable100007Capital Ac1900008Drawings180009Sales25700010Purchases5000011Carriage inwards250012Salaries2000013Marketing expenses300014Insurance paid150015Furniture's and fixtures650016Stock1200017Rent2500Total475000475000

Refer the data given below −Name of accountAmount (in rupees)Name of accountAmount (in rupees)BalancesTotal(credit)Total(debit)Cash in hand100002000010000Supplies3000Accounts receivable17500Revenue fee20000Accounts payable100020001000Note payable5000Revenue (unearned)800Common stock7000Furniture and fitting3500Machinery4000SolutionThe trial balance prepared by using total and balance method is given below -      TitleDD/MM/YYYY Sl.NoParticularsLedger folioTotalsBalancesdebitCreditdebitCredit1Cash200001100090002Supplies300030003Accounts receivable800080004Revenue (Fee)10000100005Account payable500015000100006Note payable250025007Revenue (unearned)100010008Common stock350035009Furniture and fitting3000300010Machinery40004000Total43000430002700027000

This method is used rarely because it duplicates the work. In this method, both balances and totals of debit and credit sides are tabulated in separate columns. Debit totals are recorded in the debit total column and credit totals are recorded in the credit column separately. Similarly, debit balances are recorded in the debit balance column and credit balance is recorded in the credit balance column.FormatThe format for preparing the trial balance by using balances and totals method is given below −      TitleDD/MM/YYYY Sl.NoParticularsLedger folioTotalsBalancesdebitCreditTotalHere, Title − Name of the company.DD/MM/YYYY − Trial balance prepared Date, Month ... Read More

Refer the data given below −Name of accountAmount (in rupees)Name of accountAmount (in rupees)Cash (debit)25000Supplies1600Accounts receivable7000Revenue fee15500Accounts payable (debit)5600Note payable8200Revenue (unearned)4400Common stock10500Furniture and fitting3500Machinery6000Cash (Credit)6500Account payable (credit)3600SolutionGiven below is the trial balance by using totals method −      ABC ltd28/02/2001 Sl.NoName of AccountLedger folioBalancedebitCredit1Cash2500065002Supplies16003Accounts receivables70004Revenue (Fee)155005Account payable560036006Note payable82007Unearned revenue44008Common stock105009Furniture and fitting350010Machinery6000Total4870048700

This method is not widely used because the accuracy of balances is not determined in this method. In the totals method, both credit total and debit total is tabulated in two separate columns and credit and debit sides of the ledger are totaled.FormatThe format for preparing the trial balance by using totals method is given below −      TitleDD/MM/YYYY Sl.NoParticularsLedger folioTotalsdebitCreditTotalHere, Title − Name of the company.DD/MM/YYYY − Trial balance prepared Date, Month and Year.Sl. No − Ledger account number (serial numbers).Particulars − Full account name of ledger account.Ledger folio − Page number of ledger balance of accounts.Debit − ... Read More

Refer the data given below −Name of accountAmount (in rupees)Name of accountAmount (in rupees)Cash in hand18500Supplies2500Accounts receivable5500Revenue fee18000Accounts payable2000Note payable8500Revenue (unearned)1500Common stock9000Furniture and fitting5000Machinery7500SolutionGiven below is the trial balance by using balances method −     ABC ltd       28/02/2001Sr.NoAccount titleLedger folioBalancedebitCredit1Cash 18500 2Supplies 2500 3Account receivables 5500 4Revenue (Fee)  180005Account Payable  20006Note payable  85007Unearned revenue  15008Common stock  90009Furniture and fitting 5000 10Machinery 7500 Total39003900

This is the most commonly used method for preparing a trial balance. In this method, closing balances are tabulated in two separate statements. All the credit balances are recorded in the credit column and all the debit balances are recorded in the debit column. Both balances are then tallied.FormatThe format to prepare a trial balance is as follows −Title       DD/MM/YYYYAccount numberAccount titleLedger folioBalancedebitCredit          Total  Here, Title − Name of the company.DD/MM/YYYY − Trial balance prepared Date, Month and Year.Sl. No − Ledger account number (serial numbers).Name of account − Full account name of ledger account.Ledger folio − Page number of ledger balance of accounts.Debit − ... Read More

The format of trial balance is as follows −Title      DD/MM/YYYYAccount numberAccount titleLedger folioBalancedebitCredit          Here, Title − Name of the company.DD/MM/YYYY − Trial balance prepared Date, Month and Year.Account number − Ledger account (serial numbers).Account title − Full account name of ledger account.Ledger folio − Page number of ledger balance of accounts.Debit − Debit balance.Credit − Credit balance.Balances records in the debit column includes the following −Assets − Trademarks, goodwill, stock, accounts receivables, land, leasehold property, building, investments, furniture etc.Expenses − Rent, bad debt expenses, advertisement, salary, discount, depreciation, commission, repairs, interest etc.Prepaid expenses − Insurance (prepaid), salary in advance, rent (prepaid) etc.Accrued income − Interests on accrued on ... Read More

Trial balance records and categorizes all the ledger balances into debit and credit in a particular period.ObjectivesThe objectives of trial balances are explained below −Arithmetical accuracyArithmetical accuracy of transactions is provided, if trial balance is balanced. If it is not balanced, there may be some error and need for rectification.Error rectificationError rectification in trial balance refers to the following −Postings in various ledger accounts are checked and also their appearances are verified.Subsidiary books are checked.Opening balances are checked and necessary corrections (if any) are made.If the balances are still not balanced, repeat the process.SummarisationTrial balance summarises ledger accounts.Final accountsWithout trial ... Read More