Trial balance is prepared to check arithmetical accuracy of debit and credit balance.
If there is any error, it is rectified with journal entries.
Trial balance can be prepared at any time.
Generally, it is prepared at the end of every month.
But it can be prepared quarterly or half yearly.
It is compulsorily prepared at the close of every accounting period to verify the arithmetical accuracy of the ledger accounts.
There are three methods to prepare trial balance. They are as follows:
Under total method, trial balance is prepared by taking the total of debits and credit of all ledger accounts.
Under balance method, only the balances of all the ledger accounts are taken to prepare the trial balance.
Balance method is the most popular method to prepare trial balance.
Compound method is the combination of both total method and balance methods.
Compound method is also known as total-cum-balance method.
Trial Balance
ABC Traders
SN. |
Debit (Dr) |
Amount |
Credit (Cr) |
Amount |
|
Assets: |
|
Capital and reserve: |
|
|
Goodwill |
xxxx |
Capital |
xxxx |
|
Land and building |
xxxx |
General reserve |
xxxx |
|
Plant and machinery |
xxxx |
Capital reserve |
xxxx |
|
Furniture and fitting |
xxxx |
Reserve fund |
xxxx |
|
Stock (inventory, merchandise) |
xxxx |
Reserve for bad debts (doubtful debts) |
xxxx |
|
Prepaid expenses |
xxxx |
Liabilities: |
|
|
Debtors (book debts) |
xxxx |
Creditors |
xxxx |
|
Bills receivable |
xxxx |
Bills payable |
xxxx |
|
Account receivable |
xxxx |
Account payable |
xxxx |
|
Accrued income |
xxxx |
Loan (10% Loan) |
xxxx |
|
Cash balance |
xxxx |
Outstanding expenses |
xxxx |
|
Bank balance |
xxxx |
Advance income |
xxxx |
|
Expenses: |
|
Revenue and income: |
|
|
Opening stock |
xxxx |
Sales |
xxxx |
|
Purchase |
xxxx |
Interest received |
xxxx |
|
Carriage inward/outward |
xxxx |
Discount received |
xxxx |
|
Purchase expenses |
xxxx |
Commission received |
xxxx |
|
Factory expenses |
xxxx |
Rent received |
xxxx |
|
Office expenses |
xxxx |
Bad debts received |
xxxx |
|
Selling expenses |
xxxx |
Other income |
xxxx |
|
Distribution expenses |
xxxx |
|
|
|
Financial expenses |
xxxx |
Gain: |
|
|
Bad debts |
xxxx |
Gain on sales of assets |
xxxx |
|
Discount allowed |
xxxx |
Gain on sales of investment |
xxxx |
|
Interest paid |
xxxx |
|
|
|
Commission paid |
xxxx |
Return: |
|
|
Rent paid |
xxxx |
Purchase return |
xxxx |
|
Other expenses |
xxxx |
|
|
|
Losses: |
|
|
|
|
Loss on sales of assets |
xxxx |
|
|
|
Loss on sales of investment |
xxxx |
|
|
|
Return: |
|
|
|
|
Sales return |
xxxx |
|
|
|
|
xxxx |
|
xxxxx |
Note: Generally closing stock is adjusted separately.
#######
Click on link for YouTube videos topic wise : |
|
Accounting Equation |
|
Basic Journal Entries in Nepali |
|
Basic Journal Entries |
|
Journal Entry and Ledger |
|
Ledger Account |
|
Subsidiary Book |
|
Cash Book |
|
Trial Balance and Adjusted Trial Balance |
|
Bank Reconciliation Statement (BRS) |
|
Depreciation |
|
Click on link for YouTube videos chapter wise: |
|
Financial Accounting and Analysis (All videos) |
|
Accounting Process |
|
Accounting for Long Lived Assets |
|
Analysis of Financial Statement |
#######
Keep in Mind
Following expenses are debited in trial balance: |
||
Trading Account |
Office or Administrative Expenses: |
Selling and Distribution Expenses: |
Purchase expenses: |
Salary and wages |
Carriage or freight outward |
Carriage or carriage inward |
Director’s fees |
Carriage or freight on sales |
Freight or freight inward |
Office rent, rates and tax |
Travelling expenses |
Carriage on purchase |
Printing and stationery |
Advertisement and publicity |
Purchase expenses |
Postage expenses |
Free sample |
Octoi |
Insurance |
Sales expenses |
Import duty or custom duty |
Phone, mobile, internet expenses |
Packing expenses |
Clearing charge |
Bank charge |
Salary to sales agent |
Dock charge (dock dues) |
Legal charge |
Commission to sales agent |
Coolie and cartage |
License fees |
Rent of warehouse or godown |
Packing on purchase |
Audit fee |
Stationery, postage expenses |
Factory expenses: |
Interest on loan |
Phone, mobile, internet expenses |
Wages and salary |
Staff benefits |
Insurance of warehouse |
Productive wages |
Bonus to staff |
Trade or trading expenses |
Store keeper’s salary |
Office lighting and power |
Delivery expenses |
Fuel and power |
Entertainment expenses |
Bad debts |
Motive power |
General expenses |
Provision for bade debts |
Store consumed* |
Establishment expenses |
Discount allowed |
Coal, gas, stem and water |
Commission paid |
Sales tax or VAT or GST |
Heating and power |
Manager’s commission |
|
Excise duty |
Interest on capital |
Non-cash expenses: |
Royalty (for manufacturing) |
Non-cash expenses: |
Depreciation on warehouse |
Factory insurance |
Depreciation on equipment |
Depreciation on delivery van |
Factory rent, rates and taxes |
Depreciation on furniture |
|
Estimate expenses |
Depreciation on land building |
Other expenses and losses: |
Benefit to workers |
|
Loss by fire or theft |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 1A
TK Traders had following accounts balances:
Name of ledgers |
Amount |
|
Amount |
Bank |
20,000 |
Salary |
40,000 |
Equipment |
100,000 |
Rent |
12,000 |
Purchase |
46,000 |
Sales |
90,000 |
Debtors |
22,000 |
Capital |
160,000 |
Furniture |
50,000 |
Creditors |
40,000 |
Required: Trial balance
[Answer: Trial balance = 290,000]
SOLUTION:
Trial balance of TK Traders
Particulars |
Amount Dr |
Amount Cr |
|
Bank |
20,000 |
|
|
Equipment |
1,00,000 |
|
|
Purchase |
46,000 |
|
|
Debtors |
22,000 |
|
|
Furniture |
50,000 |
|
|
Salary |
40,000 |
|
|
Rent |
12,000 |
|
|
Sales |
|
90,000 |
|
Capital |
|
1,60,000 |
|
Creditors |
|
40,000 |
|
Total |
2,90,000 |
2,90,000 |
|
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 1B
Salman Traders has following balances of ledger on 31st December 2019:
Ledger balances |
Amount |
Ledger balances |
Amount |
Opening stock |
30,000 |
Carriage inwards |
5,000 |
Plant and machinery |
80,000 |
Office salaries |
25,000 |
Furniture |
40,000 |
Bad debts |
500 |
Debtors |
80,000 |
General expenses |
1,500 |
Cash at bank |
26,000 |
Insurance for business |
2,000 |
Purchases |
200,000 |
Office rent |
20,000 |
Wages |
30,000 |
Drawings |
15,000 |
Capital |
150,000 |
Purchase returned |
10,000 |
Bank loan |
50,000 |
Reserve for bad debts |
2,000 |
Sundry creditors |
40,000 |
Discount received |
3,000 |
Sales |
300,000 |
|
|
Required: Trial balance
[Answer: Total 555,000]
SOLUTION
Trial balance of Salman Traders
Particulars |
Amount Dr |
Amount Cr |
|
Opening stock |
30,000 |
|
|
Plant and machinery |
80,000 |
|
|
Furniture |
40,000 |
|
|
Debtors |
80,000 |
|
|
Cash at bank |
26,000 |
|
|
Purchases |
200,000 |
|
|
Wages |
30,000 |
|
|
Capital |
|
150,000 |
|
Bank loan |
|
50,000 |
|
Sundry creditors |
|
40,000 |
|
Sales |
|
300,000 |
|
General expenses |
1,500 |
|
|
Insurance for business |
2,000 |
|
|
Office rent |
20,000 |
|
|
Drawings |
15,000 |
|
|
Purchase returned |
|
10,000 |
|
Reserve for bad debts |
|
2,000 |
|
Discount and commission |
|
3,000 |
|
Carriage inwards |
5,000 |
|
|
Office salaries |
25,000 |
|
|
Bad debts |
500 |
|
|
Total |
555,000 |
555,000 |
|
*******
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 1A
Following accounts balances are given to you by Manisha Traders:
Name of ledgers |
Amount |
|
Name of ledgers |
Amount |
Capital |
1,00,000 |
|
Rent paid |
20,000 |
Purchase |
50,000 |
|
Furniture |
10,000 |
Sales revenue |
1,30,000 |
|
Carriage outward |
5,000 |
Opening stock |
10,000 |
|
Debtors |
20,000 |
Wages |
15,000 |
|
Plant and machinery |
1,50,000 |
Creditors |
20,000 |
|
Bank loan |
30,000 |
Required: Trial balance
[Answer: Trial balance = Rs 2,80,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 1B
Following accounts balances are given to you by Binisha Suppliers:
Name of ledgers |
Amount |
|
Name of ledgers |
Amount |
Purchase |
2,00,000 |
|
Rent received |
70,000 |
Sales return |
15,000 |
|
Land and building |
4,00,000 |
Sales revenue |
5,00,000 |
|
Account receivable |
50,000 |
Goodwill |
50,000 |
|
Plant and machinery |
2,80,000 |
Salaries |
60,000 |
|
Account payable |
90,000 |
Prepaid insurance |
10,000 |
|
Capital |
4,05,000 |
Required: Trial balance
[Answer: Trial balance = 10,65,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 1C
XYZ Traders has following accounts balance on 31st December 2019:
Name of ledgers |
Amount |
Name of ledgers |
Amount |
Purchase |
310,000 |
Advance insurance |
3,300 |
Carriage |
5,000 |
Plant and machinery |
150,000 |
Salaries |
24,000 |
Bad debts |
2,000 |
Electricity charge |
4,500 |
Sundry debtors |
45,000 |
Travelling expenses |
8,900 |
Bills receivable |
30,000 |
Telephone expenses |
4,300 |
Cash in hand |
8,000 |
Advertisement |
10,000 |
Drawing |
10,000 |
Bank overdraft |
80,000 |
Sales |
300,000 |
Bills payable |
10,000 |
Advance rent |
20,000 |
Capital |
120,000 |
Creditors |
85,000 |
Required: Trial balance
[Answer: Total 615,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 1D
The following is ledgers balances of AK Trading Concern on 31st December 2019:
Accounts heads |
Amount |
Accounts heads |
Amount |
Buildings |
200,000 |
Capital |
400,000 |
Drawings |
50,000 |
12% Loan |
50,000 |
Furniture |
30,000 |
Sales |
395,000 |
Creditors |
50,000 |
Bank balance |
10,500 |
Provision for bad debts |
2,500 |
Bills receivables |
40,000 |
Bills payables |
44,000 |
Return inward |
8,000 |
Return outward |
5,000 |
Salaries |
51,000 |
Vehicles |
50,000 |
Commission (Cr) |
3,000 |
Interest on loan |
3,000 |
Insurance |
5,000 |
Purchases |
242,000 |
Debtors |
100,000 |
Beginning stock |
130,000 |
Wages |
30,000 |
Required: Trial balance
[Answer: Total 949,500]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 1E
The following ledger balances of AF Trading Concern for the year ending 31st December 2019 is given:
Ledger balances |
Amount |
Ledger balances |
Amount |
Land and Building |
15,000 |
Insurance |
900 |
Goodwill |
10,000 |
Debtors |
10,000 |
Drawing |
5,000 |
Salaries |
7,400 |
Freight on sales |
500 |
Wages |
3,000 |
Closing stock |
7,000 |
Sales return |
500 |
Discount allowed |
500 |
Purchases |
48,000 |
Cash at bank |
2,200 |
Opening stock |
12,000 |
Bad debts |
500 |
Unearned commission |
2,000 |
Purchase return |
1,500 |
Overdraft |
12,000 |
Sales |
90,000 |
Reserve of doubtful debts |
1,000 |
Capital |
45,000 |
Creditors |
13,000 |
Plant and machinery |
42,000 |
|
|
Required: Trial balance
[Answer: Total 164,500]
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