| Trial
Balance
The trial balance is a worksheet on which you list all your
general ledger accounts and their debit or credit balance. It is
a tool that is used to alert you to errors in your books. The
total debits
must equal the total credits.
If they don't equal, you know you have an error that must be
tracked down.
When closing out your books at the end of an accounting
period, you will prepare three trial balances:
- A preliminary trial balance is prepared using your general
ledger account balances before you make adjusting
entries.
- An adjusted trial balance is done after preparing
adjusting entries and posting
them to your general ledger. This will help ensure that the
books used to prepare your financial
statements are in balance.
- A post-closing trial balance is done after preparing and
posting your closing
entries. This trial balance, which should contain only balance
sheet accounts, will help guarantee that your books are
in balance for the beginning of the new accounting period.
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You are getting ready to close the books for
the year ended December 31, 2002. You post
totals from the journals to the general ledger,
and foot
the general ledger accounts. Then you prepare
the following preliminary trial balance, using
the balances from your general ledger accounts.
Beta Service Company
Preliminary Trial Balance
December 31, 2002
|
|
|
Debit |
Credit |
| Cash in bank |
3,423 |
|
| Accounts receivable |
11,400 |
|
| Equipment |
42,900 |
|
| Accumulated depr. equip. |
|
29,500 |
| Buildings |
119,000 |
|
| Accumulated depr. build. |
|
17,950 |
| Land |
80,000 |
|
| Accounts payable |
|
2,213 |
| Payroll taxes payable |
|
2,567 |
| Mortgage payable |
|
135,812 |
| Capital |
|
59,823 |
| Drawing account |
24,000 |
|
| Sales |
|
332,462 |
| Advertising |
18,900 |
|
| Depreciation |
16,760 |
|
| Insurance |
4,500 |
|
| Interest expense |
12,421 |
|
| Payroll taxes |
16,233 |
|
| Property taxes |
4,989 |
|
| Repairs and maintenance |
23,430 |
|
| Utilities |
3,856 |
|
| Wages |
198,515 |
|
|
580,327 |
580,327 |
 |
A
trial balance spreadsheet can be found in
the Business Tools area. It is an
Excel 4.0 spreadsheet template, so you can use
the template as a starting point for your own
trial balance.
|
|
What if your trial balance does not balance? In other words,
what if total debits don't equal total credits? This shouldn't
surprise or discourage you. In fact, it might be more surprising
if it does balance. Accounting errors happen. Even
experienced bookkeepers normally have to find
trial balance errors.
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