TRIAL
BALANCE
After the transactions are posted to various ledger accounts (either from
journal or from subsidiary books) and they are balanced, the next stage is to
draw up the list of all balances. We
know that some ledger accounts will show ‘debit balance’ (debit side greater
than the credit side), while the other will reflect a ‘credit balance’ (Credit
side being higher than debit side). All
account balances are listed to ensure that the total of all debit balances
equals the total of all credit balances.
Why does this happen? Remember
the dual aspect concept studied earlier in this study note? According to this
concept, every debit has equal corresponding credit. This list of balances is called Trial
Balance.
According to the Dictionary for Accountants by Eric.L.Kohler, Trial
Balances id defined as “ a list or abstract of the balances or of total debits
and total credits of the accounts in a ledger, the purpose being to determine
the equality of posted debits and credits and to establish a basic summary for
financial statements”. According to Rolland, “The final list of balances,
totaled and combined, is called Trial Balance.
As this is merely a listing of balances, this will always be as on a
particular date. Further it must be
understood that trial balance does not form part of books of account, but it is
a report prepared by extracting balances of accounts maintained in the books of
accounts.
When this list with tallied debit and credit balances is drawn up, the
arithmetical accuracy of basic entries, ledger posting and balancing is
ensured. However, it does not guarantee
that the entries are correct in all respect.
This will be explained later this chapter.
Although it is supposed to be prepared at the end of accounting period,
computerized accounting packages are capable of providing instant Trial Balance
reports even on daily basis, as the transactions are recorded almost on line.
Let us prepare the Trial balance for the ledger accounts from the
following illustration.
2014
April
1 Mr. Vikas and Mrs.Vaibhavi who are husband and wife start consulting
business by bringing in their personal cash of Rs.5,00,000 and 250000
respectively.
10 Bought office furniture of Rs.25000 for cash bill no.2014/f/3
11 Opened a current account with Punjab National Bank by depositing
Rs.100000
15 paid office rent of Rs.15000 for the monthby cheque to M/s Realtors
proprieties. Voucher No.3
20 Bought a motor car worth Rs.450000 fro Millennium Motors by making a
down payment of Rs.50000 by cheque and the balance by taking a loan from HDFC
bank. Voucher No.M/13/7
25 Vikas and Vaibhavi carried out a consulting assignment for Avon
Pharmaceuticals and raised a bill for Rs.1000000 as consultancy fees. Bill no.B13/4/1 raised. Avon Pharmaceuticals have immediately settled
Rs.250000 by way of cheque and the balance will be paid after 30 days. The cheque received is deposited into bank.
30 Sale of one receptionist @ Rs.5000 per month and one officer @
Rs.10000 per month. The salary for the
current month is payable to them.
Solution:
The entries for these transactions in a journal will look like:
|
Date
|
Particulars
|
Voucher Number
|
Ledger folio
|
Debit amount
|
Credit amount
|
|
01.04.14
|
Cash A/c Dr.
To Vikas’s Capital A/c
To Vaibhavi’s Capital A/c
(Being capital brought in by the partners)
|
|
1
2
3
|
750000
|
500000
250000
|
|
10.04.14
|
Furniture A/c Dr.
To Cash A/c
(Being furniture purchased in cash)
|
2014/F/3
|
4
1
|
25000
|
25000
|
|
11.04.14
|
Punjab National Bank A/c Dr.
To Cash A/c
(Being current account opened with Punjab national bank by depositing
cash)
|
|
5
1
|
100000
|
100000
|
|
15.04.14
|
Rent A/c Dr.
To Punjab National Bank A/c
(Being rent paid to realtors properties for the month)
|
3
|
6
5
|
15000
|
15000
|
|
20.04.14
|
Motor Car A/c
Dr.
To Punjab National bank A/c
To Loan from HDFC Bank A/c
(Being car purchased from Millennium motors by paying down payment and
loan arrangement)
|
M/13/7
|
7
5
8
|
450000
|
50000
400000
|
|
25.04.14
|
Punjab National Bank A/c Dr.
Avon Pharmaceuticals A/c Dr.
To Consultancy Fees A/c
(Being amount received and revenue recognized for fees charged)
|
B13/4/1
|
5
9
10
|
250000
750000
|
1000000
|
|
30.04.14
|
Salary A/c
Dr.
To Salary Payable A/c
(Being the entry to record salary obligation for the month)
|
|
11
12
|
15000
|
15000
|
Folio No. 1
Cash
–Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
01.04.14
|
To Vikas’s Capital A/c
|
1
|
500000
|
10.04.14
|
By Furniture A/c
|
1
|
25000
|
|
01.04.14
|
To Vaibhavi’s Capital A/c
|
1
|
250000
|
11.04.14
|
By Punjab National Bank A/c
|
1
|
100000
|
|
|
|
|
|
30.04.14
|
By Balance C/d
|
|
625000
|
|
|
|
|
750000
|
|
|
|
750000
|
|
01.05.14
|
To Balance b/c
|
|
625000
|
|
|
|
|
Folio No. 2
Mr.Vikas’s
Capital Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
|
To balance b/d
|
|
500000
|
1.04.14
|
By cash A/c
|
1
|
500000
|
|
|
|
|
500000
|
|
|
|
500000
|
|
|
|
|
|
|
|
|
|
Folio
No.3
Mrs.Vaibhavi’s
Capital Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
|
To balance b/d
|
|
250000
|
01.04.14
|
By Cash A/c
|
1
|
250000
|
|
|
|
|
250000
|
|
|
|
250000
|
Folio No. 4
Furniture
Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
10.04.14
|
To Cash A/c
|
|
25000
|
|
By balance b/d
|
|
25000
|
|
|
|
|
25000
|
|
|
|
25000
|
Folio
No. 5
Punjab
National Bank Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
11.04.14
|
To Cash A/c
|
1
|
100000
|
15.04.14
|
By Rent A/c
|
1
|
15000
|
|
25.04.14
|
To Consultancy Fees A/c
|
1
|
250000
|
20.04.14
|
By Motor Car a/c
|
1
|
50000
|
|
|
|
|
|
|
By balance
|
|
285000
|
|
|
|
|
350000
|
|
|
|
350000
|
Folio
No. 6
Rent
Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
15.04.14
|
To Punjab National Bank A/c
|
1
|
15000
|
|
By balance
|
|
15000
|
|
|
|
|
15000
|
|
|
|
15000
|
Folio
No.7
Motor Car Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
20.04.14
|
To Punjab National bank a/c
|
1
|
50000
|
|
By balance
|
|
450000
|
|
20.04.14
|
To Loan from HDFC Bank A/c
|
1
|
400000
|
|
|
|
|
|
|
|
|
450000
|
|
|
|
450000
|
Folio No. 8
Loan
from HDFC Bank Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
|
To balance
|
|
400000
|
20.04.14
|
By Motor Car A/c
|
1
|
400000
|
|
|
|
|
400000
|
|
|
|
400000
|
Avon Pharmaceuticals Account Folio no. 9
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
25.04.14
|
To Consultancy fee A/c
|
1
|
750000
|
|
By balance
|
|
750000
|
|
|
|
|
750000
|
|
|
|
750000
|
Folio
No. 10
Consultancy
Fees Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
|
To balance
|
|
1000000
|
25.04.14
|
By Punjab national Bank A/c
|
1
|
250000
|
|
|
|
|
|
25.04.14
|
By Avon Pharmaceuticals a/c
|
1
|
750000
|
|
|
|
|
1000000
|
|
|
|
1000000
|
Folio
No. 11
Salary
Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
30.04.14
|
To Salary Payable a/c
|
1
|
15000
|
|
By balance
|
|
15000
|
|
|
|
|
15000
|
|
|
|
15000
|
Folio
No. 12
Salary Payable Account
Dr Cr
|
Date
|
Particulars
|
J.F
|
Amount
|
Date
|
Particulars
|
J.F
|
Amount
|
|
|
To balance
|
|
15000
|
30.04.14
|
By Salary A/c
|
|
15000
|
|
|
|
|
15000
|
|
|
|
15000
|
Trial Balance as on
|
Account Name
|
Debit
|
Credit
|
|
Cash A/c
|
6,25,000
|
|
|
Vikas’s Capital A/c
|
|
5,00,000
|
|
Vaibhavi’s Capital A/c
|
|
2,50,000
|
|
Furniture
|
25,000
|
|
|
Punjab National Bank A/c
|
2,85,000
|
|
|
Rent A/c
|
15,000
|
|
|
Motor Car
|
4,50,000
|
|
|
Loan from HDFC A/c
|
|
4,00,000
|
|
Avon Pharmaceuticals
|
7,50,000
|
|
|
Consultancy fees A/c
|
|
10,00,000
|
|
Salary A/c
|
15,000
|
|
|
Salary Payable A/c
|
|
15,000
|
|
Total
|
21,65,000
|
21,65,000
|
It can be seen that the totals of debit and credit balances is exactly
matching. This is the result of double
entry book-keeping wherein every debit has equal corresponding credit.
Feature’s of a Trial Balance
1.
It is a list of debit
and credit balances which are extracted from various ledger accounts.
2.
It is a statement of
debit and credit balances.
3.
The purpose is to
establish arithmetical accuracy of the transactions recorded in the Books of
Accounts.
4.
It does not prove
arithmetical accuracy which can be determined by audit.
5.
It is not an
account. It is only a statement of
account.
6.
It is not a part of the
final statements.
7.
It is usually prepared
at the end of the accounting year but it can also be prepared anytime as and
when required like weekly, monthly, quarterly or half-yearly.
8.
It is a link between
books of accounts and the profit and loss account and balance sheet.
Preparation of Trial Balance:
1.
It may be prepared on a
loose sheet of paper
2.
The ledger accounts are
balanced at first. They will have either
“debit-balance” or “Credit-balance” or “nil-balance”.
3.
The accounts having
debit-balance is written on the debit column and those having credit-balance
are written on the credit column.
The
sum total of both the balances must be equal, for “Every debit has its
corresponding and equal credit”.
Purpose
of a Trial Balance
It
serves the following purposes:
1.
To check the arithmetical
accuracy of the recorded transactions.
2.
To ascertain the balance of
any ledger account.
3.
To serve as an evidence of
fact that the double entry has been completed in respect of every transaction.
4.
To facilitate the
preparation of final accounts promptly.
Is Trial Balance Indispensable?
It is a mere statement prepared by
the accountants of his own convenience and if it agrees, it is assumed that at
least arithmetical accuracy has been done although there may be a lot of
errors.
Trial balance is not a process of
accounts, but its preparation helps us to finalize the accounts. Since it is prepared on a particular date, as
at ------------ / as on ----------- is
stated.
Forms of a Trial Balance
A trial balance may be prepared in
two forms, they are-
1.
Journal form
2.
Ledger Form
The trial balance must tally
irrespective of the form of a trial balance.
1.
Journal Form: This
form of a Trial Balance will have a format of journal folio. It will have a column for serial number, name
of the account, ledger folio, debit amount and credit amount columns in this
journal form.
The ledger folio will show the page number
on which such account appears in the ledger.
Specimen of Journal form of Trial balance:
Trial
Balance as on --------
|
Sl.No.
|
Name of the Account
|
L.F
|
Debit Balance
|
Credit Balance
|
|
|
|
|
|
|
2.
Ledger Form: This
form of a trial balance have two sides i.e. debit side and credit side. In fact, the ledger form of a trial balance
is prepared in the form of an account.
Each side of the trial balance will have particulars (name of the
account) column, folio column and the amount column.
Specimen of ledger form of Trial balance
Dr. Trial
balance as on -------------- Cr.
|
Name of the Account
|
L.F
|
Amount
|
Name of the Account
|
L.F
|
Amount
|
|
|
|
|
|
|
|
Methods of Preparation
1.
Total Method or Gross
Trial balance.
2.
Balance Method or Net
Trial Balance.
3.
Compound Method
These are explained as under:-
1. Total Method or Gross Trial balance: Under this method,
two sides of the accounts are totaled.
The total of the debit side is called the “debit total” and the total of
the credit side is called the “credit total”.
Debit totals are entered on the debit side of the Trial balance while
the credit total is entered on the credit side of the Trial balance.
If a particular account has total
in one side, it will be entered either in the debit column or the credit column
as the case may be.
Advantages:
a)
It facilitates arithmetical
accuracy of the accounts.
b)
Extraction of ledger
balances is not required at the time of preparation of Trial balance.
Disadvantages:
Preparation of Final accounts is
not possible.
2. Balance Method or Net Trial Balance: under this method,
all the ledger accounts are balanced.
The balances may be either “Debit-balance” or “Credit balance”
Advantages:
a)
It helps in the easy
preparation of final accounts.
b)
It saves time and
labour in constructing a Trial balance.
Disadvantages:
Errors may remain undisclosed irrespective
of the agreement of Trial Balance.
3.
Compound Method: Under
this method, totals of both the sides of the accounts are written in the
separate columns. Along with this, the
balances are also written in the separate columns. Debit balances are written in the debit
column and credit balances are written in the credit column of the Trial
balance.
Advantages: It offers the advantage
of both the methods.
Disadvantages: Lengthy process and
more time consumed in the preparation of Trial balance.
Summary of Rules
Debit Balance – All assets,
Drawings, Debtors, Expenses and losses.
Credit Balance – All liabilities,
Capital, Creditors, Gains and Incomes.
Trial balance – Utility and
Interpretation
The utility of Trial balance could be found
in the following:
1.
It forms the basis for
preparation of financial statements i.e. Profit and Loss Account and balance
Sheet.
2.
A tallied trial balance
ensures the arithmetical accuracy of the entries made. If the trial balance does not tally, the
errors can be found out, rectified and then financial statements can be
prepared.
3.
It acts as a quick
reference. One can easily find out the
balance in any ledger account without actually referring to the ledger.
4.
If the listing of ledger
accounts is systematically done in the trial balance, one can do quick time
analysis. Hence, listing is usually done
in the sequence of Asset accounts, liability accounts, Capital accounts,
Owner’s equality accounts, Income or gain accounts and Expenses or losses
accounts in that order.
One
can draw some quick inference from trial balance by interpreting the same. If one plots monthly trial balances side by
side, one can analyze the movement of balances in various accounts e.g. one can
see how expenses are increasing or decreasing or showing a trend of
movements. By comparing the owner’s
equity balances as on two dates, one can interpret the business result e.g. if
the equity has gone up, one can interpret that business has earned net profit
and vice versa.
Trial
Balance and Errors
We have seen that a tallied trial
balance (T.B) ensures arithmetical accuracy.
What does it mean? It means entries have been passed as per double
entry, that every debit has equal corresponding credit. If the T.B does not tally, there could be
errors in transaction entry. Such errors
are called ‘ Errors affecting trial balance’. These can be
a.
Only one effect of a
transaction is posted to ledger e.g. for rent paid in cash, if entry is posted
to cash but not to rent account, then obviously the T.B. will not match.
b.
Posting of wrong amount in
one of the ledger e.g. rent of Rs.1000 is paid in cash. The posting to Rent a/c is done for
Rs.1000, Cash A/c is recorded at
Rs.10,000. The T.B will not tally.
c.
If one of the posting is
entered twice, T.B. will not match.
d.
If the balance in a ledger
is not correctly taken to the T.B. e.g. the Rent A/c has a balance of Rs.1000,
but while taking it to the T.B. it is taken as Rs.100, the T.B. will through up
difference.
e.
Taking balance to the wrong
side in the T.B. e.g. a debit balance of Rs.5,00,000 in Debtors A/c is taken as
credit balance in the TB, the there will be a mismatch.
f.
Wrong carry forwards also
will result in the T.B. mismatch.
No financial statements can be
prepared if the T.B. does not tally.
Hence, the errors will have to be rectified before proceeding
further. The accountants therefore
endeavour to minimize errors by being more care full and be doing periodical
scrutiny of the entries.
Errors which are not disclosed
by a Trial Balance
The following errors cannot be
detected by a Trial Balance:
a.
Errors of Omission:
when the transaction is not at all recorded in the books of accounts, i.e.
neither in the debit sider not in the credit side of the account – trial
balance will agree.
b.
Errors of Commission:
Where there is any variation in figure/amount, e.g. instead of Rs.800 either
Rs.80/- or Rs.8000 is recorded, in both sides of ledger accounts – trial
balance will agree.
c.
Errors of Principal:
When accounts are prepared not according
to double entry principle e.g. purchase of a plant wrongly debited to Purchase
account – Trial balance will agree.
d.
Errors of Misposting:
When wrong posting is made to a wrong account instead of a correct one although
amount is correctly recorded, e.g. sold goods to B but wrongly debited to D’s
Account – trial balance will agree.
e.
Compensating Errors:
When one error is compensated by another error e.g. Discount Allowed Rs.100 not
debited to Discount Allowed Account, whereas interest received Rs.100, but not
credit to interest Account – trial balance will agree.
Procedure to locate Errors:
If the Trial Balance does not
agree, the following procedure should carefully be followed.
1.
At first, check all ledger
account balance one by one.
2.
Addition of both the
columns (Debit and Credit) should be checked.
3.
If any difference comes
divide the same by 2 and see whether the said figure appears on the correct
side or not.
4.
Additions of the subsidiary
books, and ledger accounts to be checked up.
5.
Posting from subsidiary
books to the ledger to be checked up.
6.
Opening balance of all
account whether brought forward correctly or not to be checked up.
7.
Even if the trial balance
does not agree up to this level checking should be started again from the
journal and book of original entry using tick mark.
AT A GLANCE
Trial balances as
at / as on ……….
|
Head of Accounts
|
Side of Trial Balance
|
Reasons
|
|
Cash in hand
|
Debit
|
Assets
|
|
Cash at Bank
|
Debit
|
Assets
|
|
Cash at Bank (Overdrawn)
|
Credit
|
Liability
|
|
Bank overdraft
|
Credit
|
Liability
|
|
Capital
|
Credit
|
Liability
|
|
Opening stock
|
Debit
|
Assets
|
|
Wages
|
Debit
|
Expenses
|
|
Purchase
|
Debit
|
Expenses / increase in stock
|
|
Carriage inwards
|
Debit
|
Expenses
|
|
Freight
|
Debit
|
Expenses
|
|
Royalty on production
|
Debit
|
Expenses
|
|
Gas, water, fuel
|
Debit
|
Expenses
|
|
Motive power
|
Debit
|
Expenses
|
|
Import duty
|
Debit
|
Expenses
|
|
Sales
|
Credit
|
Income / decrease in stock
|
|
Discount allowed
|
Debit
|
Losses
|
|
Discount received
|
Credit
|
Gains
|
|
Bad debts
|
Debit
|
Losses
|
|
Reserve / Provision for bad & doubtful debt (opening)
|
Credit
|
Gains (Part of Retained Earnings)
|
|
Commission received
|
Credit
|
Incomes
|
|
Salaries
|
Debit
|
Expenses
|
|
Commission paid
|
Debit
|
Expenses
|
|
Rent, rates and taxes
|
Debit
|
Expenses
|
|
Repair and maintenance
|
Debit
|
Expenses
|
|
Insurance
|
Debit
|
Expenses
|
|
Carriage outward
|
Debit
|
Expenses
|
|
Trade charges
|
Debit
|
Expenses
|
|
Royalty on sales
|
Debit
|
Expenses
|
|
Interest paid
|
Debit
|
Expenses
|
|
Interest received
|
Credit
|
Income
|
|
Advertisement
|
Debit
|
Expenses
|
|
Sundry expenses
|
Debit
|
Expenses
|
|
Miscellaneous expenses
|
Debit
|
Expenses
|
|
Miscellaneous receipts
|
Credit
|
Incomes
|
|
Income tax
|
Debit
|
Drawings / Assets
|
|
L.I.C. Premium
|
Debit
|
Drawings / Assets
|
|
Office expenses
|
Debit
|
Expenses
|
|
Export duty
|
Debit
|
Expenses
|
|
Allowances
|
Debit
|
Losses
|
|
Rebates
|
Debit
|
Losses
|
|
Sales tax
|
Debit
|
Expenses
|
|
Horses and Carts
|
Debit
|
Assets
|
|
Watch Dag Squad
|
Debit
|
Assets
|
|
Loan Secured
|
Credit
|
Liability
|
|
Loans advanced
|
Debit
|
Assets
|
|
Reserve funds
|
Credit
|
Liability
|
|
Sinking fund
|
Credit
|
Liability
|
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Sinking fund investments
|
Debit
|
Assets
|
|
Ecology fund
|
Credit
|
Liability
|
|
Ecology fund investments
|
Debit
|
Assets
|
|
Building fund
|
Credit
|
Liability
|
|
Building
|
Debit
|
Assets
|
|
Land
|
Debit
|
Assets
|
|
Plant
|
Debit
|
Assets
|
|
Machinery
|
Debit
|
Assets
|
|
Furniture and fittings
|
Debit
|
Assets
|
|
Motor vehicles
|
Debit
|
Assets
|
|
Computer
|
Debit
|
Assets
|
|
Office equipments
|
Debit
|
Assets
|
|
Goodwill
|
Debit
|
Assets
|
|
Patent rights
|
Debit
|
Assets
|
|
Copyrights
|
Debit
|
Assets
|
|
Trade marks
|
Debit
|
Assets
|
|
Investments
|
Debit
|
Assets
|
|
Shares & securities
|
Debit
|
Assets
|
|
G.P.Notes
|
Debit
|
Assets
|
|
Sundry debtors
|
Debit
|
Assets
|
|
Sundry creditors
|
Credit
|
Liability
|
|
General reserve
|
Credit
|
Liability
|
|
Bill receivable
|
Debit
|
Assets
|
|
Bills payable
|
Credit
|
Liability
|
|
Provision for discount on Debtors
|
Credit
|
Liability
|
|
Provision for discount on Creditors
|
Debit
|
Assets
|
|
Lighting and Heating
|
Debit
|
Expenses
|
|
Drawings
|
Debit
|
Assets
|
|
Contribution to Provident Fund
|
Debit
|
Assets
|
|
Prize fund
|
Credit
|
Liability
|
|
Depreciation
|
Debit
|
Losses
|
|
Provision for depreciation
|
Credit
|
Liability
|
|
Returns inwards
|
Debit
|
Losses
|
|
Returns outwards
|
Credit
|
Gains
|
|
Freehold property
|
Debit
|
Assets
|
|
Premises
|
Debit
|
Assets
|
|
Leasehold property
|
Debit
|
Assets
|
|
Loose tools
|
Debit
|
Assets
|
|
Petty cash
|
Debit
|
Assets
|
|
Provident fund
|
Credit
|
Liability
|
|
Debenture Purchased
|
Debit
|
Assets
|
|
Debentures (from public)
|
Credit
|
Liability
|
|
Loan on mortgage
|
Credit
|
Liability
|
|
Prepaid expenses
|
Debit
|
Assets
|
|
Outstanding expenses
|
Credit
|
Liability
|
|
Bad Debits recovered
|
Credit
|
Gains
|
|
Accrued incomes
|
Debit
|
Assets
|
|
Apprenticeship premium received
|
Credit
|
Income
|
|
Books
|
Debit
|
Assets
|
|
Newspaper and magazine
|
Debit
|
Expenses
|
|
Profit and loss A/c (Dr.)
|
Debit
|
Losses
|
|
Profit and loss A/c (Cr.)
|
Credit
|
Gains
|
|
Accumulated depreciation
|
Credit
|
Liability
|
|
Postage and telegram
|
Debit
|
Expense
|
|
Travelling and conveyance
|
Debit
|
Expenses
|
|
|
|
|
Illustration:
From the following ledger account balances, prepare a trial
balance of Mr.Sen for the year ended 31st martch, 2015
Capital Rs.80000; Sales Rs.1000000; Adjusted Purchase
Rs.800000; Current A/c (Cr) Rs.10000; Petty Cash Rs.10000; Sales Ledger balance
Rs.120000; Purchase ledger balance Rs.60000; Salaries Rs.24000; Carriage
inwards Rs.4000; Carriage Outward Rs.6000; Discount Allowed Rs.10000; Building Rs.80000;
Outstanding expenses Rs.10000; Prepaid Insurance Rs.2000; Depreciation Rs.4000;
Cash at Bank Rs.80000; Loan A/c (Cr) Rs.66000; Profit & loss A/c (Cr)
Rs.20000; Bad debts Recovered Rs.2000;Stock as 31.03.15 Rs.120000; Interest
Received Rs.10000; Accrued interest Rs.4000; Investment Rs.20000; Provision for
bad debts (01.04.14) Rs.6000; General Reserve Rs.20000.
Solution
Trial balance of
Mr.Sen as on 31-03-2015
Dr Cr.
|
Head of Accounts
|
Amount
|
Head of Accounts
|
Amount
|
|
Adjusted purchase
|
800000
|
Capital
|
80000
|
|
Petty cash
|
10000
|
Sales
|
1000000
|
|
Sales ledger balance
|
120000
|
Current A/c
|
10000
|
|
Salaries
|
24000
|
Purchase ledger balance
|
60000
|
|
Carriage inward
|
4000
|
Outstanding Expenses
|
10000
|
|
Discount Allowed
|
10000
|
Loan A/c
|
66000
|
|
Building
|
80000
|
Profit and Loss A/c
|
20000
|
|
Prepaid insurance
|
2000
|
Bad debits Recovered
|
2000
|
|
Depreciation
|
4000
|
Interest Received
|
10000
|
|
Cash at Bank
|
80000
|
Provision for Bad Debts
|
6000
|
|
Stock (31.03.15)
|
120000
|
General Reserve
|
20000
|
|
Accrued Interest
|
4000
|
|
|
|
Investment
|
20000
|
|
|
|
Carriage outward
|
6000
|
|
|
|
|
1284000
|
|
1284000
|
