Trial Balance
Mohammed Moin Uddin Reza Nadim
Bangladesh University of Professionals (BUP)
Trial Balance
• A trial balance is a list of accounts and their balances at a given time.
• Companies prepare a trial balance at the end of an accounting period.
• The trial balance proves the mathematical equality of debits and
credits after posting.
• A trial balance may also uncover errors in journalizing and posting.
• In addition, a trial balance is useful in the preparation of financial
statements.
Limitation of Trial Balance
Trial balance may balance even when:
1. a transaction is not journalized
2. a correct journal entry is not posted
3. a journal entry is posted twice
4. incorrect accounts are used in journalizing or posting
5. offsetting errors are made in recording the amount of a transaction.
Hence, The trial balance does not prove that the company has recorded
all transactions or that the ledger is correct.
Problem 12.1
P&C Hall is a licensed dentist. During the first month of the operation of her business, the following events and
transactions occurred.
April 1 Invested $20,000 cash in her business.
1 Hired a secretary-receptionist at a salary of $700 per week payable monthly.
2 Paid office rent for the month $1,100.
3 Purchased dental supplies on account from Smile Company $4,000.
10 Provided dental services and billed insurance companies $5,100.
11 Received $1,000 cash advance from Trudy Borke for an implant.
20 Received $2,100 cash for services completed and delivered to John Carl.
30 Paid secretary-receptionist for the month $2,800.
30 Paid $2,400 to Smile Company for accounts payable due.
Problem 12.1
P&C uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies,
No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s Capital, No. 400 Service
Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
Instructions:
(a) Journalize the transactions.
(b) Post to the ledger accounts.
(c) Prepare a trial balance on April 30, 2012.
General Journal
Date Particulars Ref Debit Credit
Cash Account – Debit 1 20,000
April 1 Owner’s Capital Account – Credit 2 20,000
(Cash investment by the owner)
April 1 Not a transaction, hence no journal is required
Rent Expense Account– Debit 3 1,100
April 2 Cash Account – Credit 1,100
(Paid office Rent)
Supplies Account – Debit 4 4,000
April 3 Accounts Payable Account – Credit 5 4,000
(Purchase of supplies on credit)
Accounts Receivable Account – Debit 6 5,100
April 10 Service Revenue Account – Credit 7 5,100
(Provided service on credit)
Cash Account – Debit 1,000
April 11 Unearned Service Revenue Account – Credit 8 1,000
(Receive cash in advanced)
General Journal
Date Particulars Ref Debit Credit
Cash Account – Debit 2,100
April 20 Service Revenue – Credit 2,100
(Received cash for rendering service)
Salaries and wages expense account – Debit 9 2,800
April 30 Cash Account – Credit 2,800
(Payment of salary)
Accounts Payable Account – Debit 2,400
April 30 Cash Account – Credit 2,400
(Payment to accounts payable)
38,500 38,500
General Ledger
Cash Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 1 Owner’s Capital Account 20,000 20,000
2 Rent Expense Account 1,100 18,900
11 Unearned Service Rev. Account 1,000 19,900
20 Service Revenue Account 2,100 22,000
30 Salaries & Wages Exp Account 2,800 19,200
30 Accounts Payable Account 2,400 16,800
General Ledger
Owner’s Capital Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 1 Cash Account 20,000 20,000
General Ledger
Rent Expense Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 2 Cash Account 1,100 1,100
General Ledger
Supplies Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 3 Accounts Payable Account 4,000 4,000
General Ledger
Accounts Payable Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 3 Supplies Account 4,000 4,000
30 Cash Account 2,400 1,600
General Ledger
Accounts Receivable Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 10 Service Revenue Account 5,100 5,100
General Ledger
Service Revenue Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 10 Accounts Receivable Account 5,100 5,100
20 Cash Account 2,100 7,200
General Ledger
Unearned Service Revenue Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 11 Cash Account 1,000 1,000
General Ledger
Salaries and Wages Expense Account
Balance
Date Particulars Ref. Debit Credit
Debit Credit
April 30 Cash Account 2,800 2,800
Trial Balance
Serial Accounts Ref Debit Credit
1 Cash Account 16,800
2 Owner’s Capital Account 20,000
3 Rent Expense Account 1,100
4 Supplies Account 4,000
5 Accounts Payable Account 1,600
6 Accounts Receivable Account 5,100
7 Service Revenue Account 7,200
8 Unearned Service Revenue Account 1,000
9 Salaries and Wages Expense Account 2,800
Total 29,800 29,800
DO IT 12.1
Fantasy Golf Course was opened on March 1 by Matt Forte. The following selected events and transactions
occurred during March.
Mar. 1 Invested $20,000 cash in the business.
3 Purchased Heeren’s Golf Land for $15,000 cash. The price consists of land $12,000, shed $2,000,
and equipment $1,000. (Make one compound entry.)
5 Paid advertising expenses of $700.
6 Paid cash $600 for a one-year insurance policy.
10 Purchased golf discs and other equipment for $1,050 from Innova Company payable in 30 days.
18 Received $1,100 in cash for golf fees earned (Fantasy records golf fees as service revenue).
19 Sold 150 coupon books for $10 each. Each book contains 4 coupons that enable the holder to play
one round of disc golf.
DO IT 12.1
25 Withdrew $800 cash for personal use.
30 Paid salaries of $250.
30 Paid Innova Company in full.
31 Received $2,100 cash for fees earned.
Fantasy uses the following chart of accounts: Cash, Prepaid Insurance, Land, Buildings, Equipment, Accounts
Payable, Unearned Service Revenue, Owner’s Capital, Owner’s Drawings, Service Revenue, Advertising Expense, and
Salaries and Wages Expense.
Requirements: 1. Prepare Journal for the month of March.
2. Prepare Ledger Accounts for the month of March.
3. Prepare Trial Balance for the month ending March.
