Overview of Trial Balance Example
An example of a trial balance can be defined as a list and which is the total of all the credit and debit accounts for an organization or a company or an entity for a given time which could be as good as a month.
The trial balance’s format is a 2-column table with all the credit balances that would be listed in one column and all the debit balances that would be listed on another side.
The trial balance will be prepared after all the transactions for that time have been journalized; that is, journal entries have been cleared and posted to the GL that is General Ledger.
Example of Trial Balance
To clarify the trial balance, it is not feasible to clarify each and every account, but we will attempt to touch on those examples that are essential in accounting for every firm:
Trial Balance Example #1
Suresh Oberoi is in the stage of preparing financial statements for the quarter ended March 2019. They have just completed the posting of general entries and recording all of their transactions. Below are balances reported at the end of the quarter. You are required to prepare a trial balance.
Solution:
Since we are given all of the final balances, we will now bifurcate the balances into debit balance and credit balance as per asset and liability classification.
Trial Balance Example #2
Gold Gems has reported the below transactions for the month of Feb 2019, and the accountant wants to prepare the trial balance for the month of Feb 2019.
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Purchase of Raw Material in cash 25,00,000
Purchase of Raw Material on credit 25,00,000
Selling of Finish product in cash 35,00,000
Selling of Finish product on credit 40,00,000
Salary paid in cash 1,00,000
You are required to prepare a trial balance based upon the above transactions only.
Solution:
First, we will find out the balances of the accounts, and we will then classify them into assets and liabilities and will prepare a trial balance.
Journal Entry:
From above, we can take the total of balances, and below is the summary for the same.
Now we can prepare a trial balance for Feb 2019.
Trial Balance Example #3
ABC and XYZ have decided to merge their business, and they are keen to know how their combined financial statements would look like. Below is the summary of the account balances. You are required to prepare a combined trial balance.
Solution:
Since we are given with all of the final balances, we will now bifurcate the balances into debit balance and credit balance as per asset and liability classification for individual entities, and then we will sum up the balances to get the combined view.
Trial Balance Example #4
Zeno wants to Tally the trial balance as it appears from below there is some mistake. You are required to correct the below trial balance and tallied it out.
Solution:
The trial balance is not tallied, and it is running out of balance by 16,00,000 that is this schedule has an excess of 1.6 million debits which needs to be figured out.
As can be seen from the above table, the cash account has been wrongly assigned as credit balance which is quite unnatural in nature, and the creditor’s account has been assigned as debit balance which again is incorrect as creditors appear on the liability side.
Hence, after correcting them, we have now the trial balance tallied. The reason it was not tallied as there was an error of classification by the accountant.
Conclusion
The following steps are necessary to take in preparing the trial balance.
- At the end or closing of the accounting year or of a month (some large organizations also prepare on a daily basis), all the ledgers and all the accounts must be closed.
- Closing balances of this ledger could be debit balances for asset accounts and credit balances for liabilities account, and then they should be posted in the trial balance.
- Errors, if any, should be identified at the time of preparing the trial balance.
- A suspense account needs to be created temporarily so as totally the trial balance till the error is found, and a correction entry is posted to the general ledger.
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