–
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.
This method is applied in this book and ebook.
Compound method is the combination of both total method and balance methods.
Compound method is also known as total-cum-balance method.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 3A
Kalika Traders has following ledgers. From these accounting ledgers, prepare trial balance:
(a)
Capital Account
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To Balance c/d |
|
1,00,000 |
|
By Bank account |
|
1,00,000 |
|
|
|
1,00,000 |
|
|
|
1,00,000 |
|
|
|
|
|
By Balance b/d |
|
1,00,000 |
Cash Account
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To Capital |
|
1,00,000 |
|
By Rent |
|
10,000 |
|
To Sales |
|
60,000 |
|
By Salary |
|
15,000 |
|
|
|
|
|
By Drawings |
|
5,000 |
|
|
|
|
|
By Purchase |
|
50,000 |
|
|
|
|
|
By Balance c/d |
|
80,000 |
|
|
|
1,60,000 |
|
|
|
1,60,000 |
|
To Balance b/d |
|
80,000 |
|
|
|
|
Purchase Account
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To Cash |
|
50,000 |
|
By Balance c/d |
|
50,000 |
|
|
|
50,000 |
|
|
|
50,000 |
|
To Balance b/d |
|
50,000 |
|
|
|
|
Sales Account
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To Balance c/d |
|
60,000 |
|
By cash |
|
60,000 |
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
|
|
By Balance b/d |
|
60,000 |
Rent Account
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To Cash |
|
10,000 |
|
By Balance c/d |
|
10,000 |
|
|
|
10,000 |
|
|
|
10,000 |
|
To Balance b/d |
|
10,000 |
|
|
|
|
Salary Account
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To Cash |
|
15,000 |
|
By Balance c/d |
|
15,000 |
|
|
|
15,000 |
|
|
|
15,000 |
|
To Balance b/d |
|
15,000 |
|
|
|
|
Drawings Account
Date |
Particulars |
LF |
Amount |
Date |
Particulars |
LF |
Amount |
|
To Cash |
|
5,000 |
|
By Balance c/d |
|
5,000 |
|
|
|
5,000 |
|
|
|
5,000 |
|
To Balance b/d |
|
5,000 |
|
|
|
|
Keep in Mind (KIM)
Debit brought down balance (balance b/d) is written in debit side of trial balance. |
Credit brought down balance (balance b/d) is written in credit side of trial balance. |
Debit carried down balance (balance c/d) is written in credit side of trial balance. |
Credit carried down balance (balance c/d) is written in debit side of trial balance. |
In total method, debit total and credit total of ledgers are recorded in trial balance |
In balance method, only balance b/d amount of ledgers are recorded in trial balance. |
Trial Balance of Kalika Traders (Total Method)
SN |
Name of Ledgers |
Amount Dr |
Amount Cr |
|
1 |
Capital |
|
1,00,000 |
|
2 |
Cash |
160,000 |
80,000 |
|
3 |
Purchase |
50,000 |
|
|
4 |
Sales |
|
60,000 |
|
5 |
Rent |
10,000 |
|
|
6 |
Salary |
15,000 |
|
|
7 |
Drawings |
5,000 |
|
|
|
Total |
240,000 |
240,000 |
|
Trial Balance of Kalika Traders (Balance Method)
SN |
Name of Ledgers |
Amount Dr |
Amount Cr |
|
1 |
Capital |
|
1,00,000 |
|
2 |
Cash |
80,000 |
|
|
3 |
Purchase |
50,000 |
|
|
4 |
Sales |
|
60,000 |
|
5 |
Rent |
10,000 |
|
|
6 |
Salary |
15,000 |
|
|
7 |
Drawings |
5,000 |
|
|
|
Total |
1,60,000 |
1,60,000 |
|
Trial Balance of Kalika Traders (Total and Balance Method)
SN |
Name of Ledgers |
Total Method |
Balance Method |
|
||
|
|
Amount Dr |
Amount Cr |
Amount Dr |
Amount Cr |
|
1 |
Capital |
|
1,00,000 |
|
1,00,000 |
|
2 |
Cash |
160,000 |
80,000 |
80,000 |
|
|
3 |
Purchase |
50,000 |
|
50,000 |
|
|
4 |
Sales |
|
60,000 |
|
60,000 |
|
5 |
Rent |
10,000 |
|
10,000 |
|
|
6 |
Salary |
15,000 |
|
15,000 |
|
|
7 |
Drawings |
5,000 |
|
5,000 |
|
|
|
Total |
240,000 |
240,000 |
1,60,000 |
1,60,000 |
|
#####
Click on link for YouTube videos: |
|
Basic Journal Entries in Nepali |
|
Basic Journal Entries |
|
Journal Entry and Ledger |
|
Ledger |
|
Subsidiary Book |
|
Cash Book |
|
Trial Balance & Adjusted Trial Balance |
|
Final Accounts |
|
Government Accounting |
|
Goswara Voucher (Journal Voucher) |
#####
PROBLEM: 3B
The following transactions are given by EP Traders during the month of March:
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
(a) Invested $/₹/Rs 300,000 cash in the business as capital.
(b) Machinery purchased at cost of Rs 120,000. Paid Rs 40,000 as down payment and the rest after 3 months
(c) Purchased equipment for Rs 50,000.
(d) Purchased inventory on account Rs 200,000.
(e) Sale of inventory on account Rs 120,000 and for cash Rs 160,000.
(f) Advance rent paid Rs 20,000.
(g) Received Rs 90,000 from customers.
(h) Paid Rs 50,000 on accounts payable.
(i) Loan taken from Mega Bank Rs 100,000.
(j) Kamal withdrew Rs 16,000 cash for personal use.
You are required to: (a) Record the above transactions in a journal;
(b) Post the journals in vertical format of ledgers; (c) Prepare a trial balance
[Answer: Trial balance = 910,000]
SOLUTION:
Journal Entries
In the book of EP Traders
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Cash account |
Dr |
1 |
300,000 |
|
|
To Capital account |
|
2 |
|
300,000 |
|
(Being- business started with cash) |
|
|
|
|
|
Machinery account |
Dr |
3 |
120,000 |
|
|
To Cash account |
|
1 |
|
40,000 |
|
To Bills payable account |
|
4 |
|
80,000 |
|
(Being- machinery purchased and part payment in cash) |
|
|
|
|
|
Equipment account |
Dr |
5 |
50,000 |
|
|
To Cash |
|
1 |
|
50,000 |
|
Record of purchase of equipment |
|
|
|
|
|
Purchases account |
Dr |
6 |
200,000 |
|
|
To Bills payable account |
|
4 |
|
200,000 |
|
(Being- goods purchased on credit) |
|
|
|
|
|
Cash account |
Dr |
1 |
160,000 |
|
|
Bills receivable account |
Dr |
7 |
120,000 |
|
|
To Sales account |
|
8 |
|
280,000 |
|
(Being- goods sold for cash and credit) |
|
|
|
|
|
Advance rent account |
Dr |
9 |
40,000 |
|
|
To Cash account |
|
1 |
|
40,000 |
|
(Being- advance rent paid) |
|
|
|
|
|
Cash account |
Dr |
1 |
90,000 |
|
|
To Bills receivable |
|
7 |
|
90,000 |
|
(Being- cash received from accounts receivable) |
|
|
|
|
|
Bills payable |
Dr |
4 |
50,000 |
|
|
To Cash |
|
1 |
|
50,000 |
|
(Being- cash paid for accounts payable) |
|
|
|
|
|
Cash account |
Dr |
1 |
100,000 |
|
|
To Mega Bank Loan |
|
10 |
|
100,000 |
|
(Being- loan received from Mega Bank) |
|
|
|
|
|
Drawings account |
Dr |
11 |
16,000 |
|
|
To Cash assets |
|
1 |
|
16,000 |
|
(Being- cash withdrawn for personal use) |
|
|
|
|
Cash Account (LF 1)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Capital |
|
300,000 |
|
300,000 |
Dr |
|
Machinery |
|
|
40,000 |
260,000 |
Dr |
|
Equipment |
|
|
50,000 |
210,000 |
Dr |
|
Sales |
|
100,000 |
|
370,000 |
Dr |
|
Advance rent |
|
|
40,000 |
330,000 |
Dr |
|
Bills receivable |
|
90,000 |
|
420,000 |
Dr |
|
Bills payable |
|
|
50,000 |
370,000 |
Dr |
|
Mega Bank loan |
|
100,000 |
|
470,000 |
Dr |
|
Drawings |
|
|
16,000 |
454,000 |
Dr |
Capital Account (LF 2)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Cash |
|
|
300,000 |
300,000 |
Cr |
|
|
|
|
|
|
|
Machinery Account (LF 3)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Cash |
|
40,000 |
|
40,000 |
Dr |
|
Bills payable |
|
80,000 |
|
120,000 |
Dr |
Bills Payable Account (LF 4)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Machinery |
|
|
80,000 |
80,000 |
Cr |
|
Purchase |
|
|
200,000 |
280,000 |
Cr |
|
Cash |
|
50,000 |
|
230,000 |
Cr |
Equipment Account (LF 5)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Cash |
|
50,000 |
|
50,000 |
Dr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase Account (LF 6)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Bills payable |
|
200,000 |
|
200,000 |
Dr |
|
|
|
|
|
|
|
Bills Receivable Account (LF 7)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Sales |
|
120,000 |
|
120,000 |
Dr |
|
Cash |
|
|
90,000 |
30,000 |
Dr |
|
|
|
|
|
|
|
Sales Account (LK 8)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Cash |
|
|
160,000 |
160,000 |
Cr |
|
Bills receivable |
|
|
120,000 |
280,000 |
Cr |
|
|
|
|
|
|
|
Advance Rent Account (LF 9)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Cash |
|
40,000 |
|
40,000 |
Dr |
|
|
|
|
|
|
|
Mega Bank Loan Account (LF 10)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Cash |
|
|
100,000 |
100,000 |
Cr |
|
|
|
|
|
|
|
Drawings Account (LF 11)
Date |
Particulars |
LF |
Debit |
Credit |
Balance |
|
|
Cash |
|
16,000 |
|
16,000 |
Dr |
|
|
|
|
|
|
|
Trial Balance of EP Traders
SN |
Name of Ledgers |
LF |
Amount Dr |
Amount Cr |
|
1 |
Cash |
1 |
4,54,000 |
|
|
2 |
Capital |
2 |
|
3,00,000 |
|
3 |
Machinery |
3 |
1,20,000 |
|
|
4 |
Bills payable |
4 |
|
2,30,000 |
|
5 |
Equipment |
5 |
50,000 |
|
|
6 |
Purchase |
6 |
2,00,000 |
|
|
7 |
Bills receivable |
7 |
30,000 |
|
|
8 |
Sales |
8 |
|
2,80,000 |
|
9 |
Advance rent |
9 |
40,000 |
|
|
10 |
Mega Bank loan |
10 |
|
1,00,000 |
|
11 |
Drawings |
11 |
16,000 |
|
|
|
Total |
|
9,10,000 |
9,10,000 |
|
*******
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 3
Srijana started a sole proprietorship business on 1st June named SA Impex. The following transactions in the first two weeks: (All transactions are through bank)
1 July, |
Bank account was opened by depositing $/₹/Rs 160,000. |
2 July, |
Second hand bike purchased for Rs 50,000 paying by cheque. |
3 July, |
Signs a rental agreement for office space for 5 years @ Rs 24,000 per annum. |
4 July, |
Office equipment purchased from BK Suppliers Rs 30,000. |
5 July, |
Goods purchased costing Rs 40,000 on credit from AK Traders |
6 July, |
Advertising expenses payable to ‘The Kantipur’ at a cost of Rs 15,000 |
8 July, |
First rental instalment paid for the month by a cheque. |
9 July, |
Goods sold for Rs 35,000 in cash. |
10 July, |
Goods sold for Rs 5,000. |
11 July, |
Telephone installation paid Rs 8,500 out of which Rs 5,000 is security deposit. |
12 July, |
Advertising expenses paid in full and Rs 20,000 paid to AK Traders. |
13 July, |
Further goods purchased of Rs 100,000 from AK Traders. |
15 July, |
Drew Rs 1,000 from bank for personal use. |
Required: (1) Journal entries; (2) Ledger accounts; (3) Trial balance
[Answer: Trial balance = Rs 330,000]
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