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Trial Balance Long Problem and Solution (Journal Entries, Ledger Accounts and Trial Balance)

Arjun EP

Published on: October 17, 2020

Preparation of trial balance

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.

Methods of preparation of trial balance

There are three methods to prepare trial balance; they are total method, balance method and compound method.

Balance method is most popular, therefore, this method is applied in this book and ebook.

Steps to prepare trial balance:

Step 1, Prepare journal entries,

Step 2, Prepare ledger accounts from journal entries,

Step 3, Find out debit or credit balance of ledger account (balance b/d),

Step 4, Transfer debit balance b/d to debit column of trail balance,

Step 5, Transfer credit balance b/d to credit column of trail balance,

Step 6, Do the sum or total of trial balance, debit and credit must be equal.

Note: if debit and credit of trail balance is not equal recheck above procedures

PROBLEM: 3A

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

Srijana started a sole proprietorship business on 1^st 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 installment 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 350,000]

SOLUTION:

Journal Entries

In the book of SA Impex

Date	Particulars		LF	Dr Amount	Cr Amount
1-July	Bank	Dr	1	160,000
	To Capital		2		160,000
	(Being- commencement of business by bank deposit)
2-July	Motor bike	Dr	3	50,000
	To Bank		1		50,000
	(Being- second hand bike purchased by cheque)
3-July	No entry

4-July	Office equipment account	Dr	4	30,000
	To BK Suppliers		5		30,000
	(Being- office equipment purchased on credit)
5-July	Purchase account	Dr	6	40,000
	To AK Traders		7		40,000
	(Being- goods purchased on credit)
6-July	Advertising expenses account	Dr	8	15,000
	To Advertising expenses payable		9		15,000
	(Being- advertising expenses due)
8-July	Rent expenses account	Dr	10	2,000
	To Bank		1		2,000
	(Being- rent paid for the month)
9-July	Bank account	Dr	1	35,000
	To Sales account		11		35,000
	(Being- goods sold for cash)
10-July	Bank account	Dr	1	5,000
	To Sales account		11		5,000
	(Being- goods sold for cash)
11-July	Telephone expenses account	Dr	12	3,500
	Security deposit account	Dr	13	5,000
	To Bank account		1		8,500
	(Being- telephone expenses and security deposits paid)
12-July	Advertising expenses payable account	Dr	9	15,000
	AK Traders account	Dr	7	20,000
	To Bank		1		35,000
	(Being- advertising exp. paid and paid to AK Traders)
13-July	Purchase account	Dr	6	100,000
	To AK Traders		7		100,000
	(Being- goods purchase on credit)
15-July	Drawing account	Dr	14	1,000
	To Bank account		1		1,000
	(Being- cash withdrew from bank for personal use)

###########

Bank Account (LF 1)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 1	To Capital		160,000	July 2	By Motor bike		50,000
July 9	To Sales		35,000	July 8	By Rent		2,000
July 10	To Sales		5,000	July 11	By Telephone expenses		3,500
				July 11	By Security deposit		5,000
				July 12	By Advt. exp. payable		15,000
				July 12	By AK Traders		20,000
				July 15	By Drawings		1,000
				July 15	By Balance c/d		103,500
			200,000				200,000
July 16	To Balance b/d		103,500

Capital Account (LF2)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 1	To Balance c/d		1,60,000	July 1	By Bank account		1,60,000
			1,60,000				1,60,000
					By Balance b/d		1,60,000

Motor Bike Account (LF 3)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 2	To Bank		50,000	July 15	By Balance c/d		50,000
			50,000				50,000
July 16	To Balance b/d		50,000

Office Equipment Account (LF 4)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 4	To BK Suppliers		30,000	July 15	By Balance c/d		30,000
			30,000				30,000
July 16	To Balance b/d		30,000

BK Suppliers Account (LF 5)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 15	To Balance c/d		30,000	July 4	By Office equipment		30,000
			30,000				30,000
				July 16	By Balance b/d		30,000

Purchase Account (LF 6)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 4	To AK Traders		40,000	July 15	By Balance c/d		140,000
July 13	To AK traders		100,000
			140,000				140,000
July 16	To Balance b/d		140,000

AK Traders Account (LF 7)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 12	To Bank		20,000	July 4	By Purchase		40,000
July 15	To Balance c/d		120,000	July 13	By Purchase		100,000
			140,000				140,000
				July 16	By Balance b/d		120,000

Advertisement Expenses Account (LF 8)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 6	To Advt expenses payable		15,000	July 15	By Balance c/d		15,000
			15,000				15,000
July 16	To Balance b/d		15,000

Advertisement Expenses Payable Account (LF 9)

ate	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 15	To Bank		15,000	July 6	By Advt expenses		15,000
			15,000				15,000

Rent Expenses Account (LF 10)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 8	To Bank		2,000	July 15	By Balance c/d		2,000
			2,000				2,000
July 16	To Balance b/d		2,000

Sales Account (LF 11)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 15	To Balance c/d		40,000	July 9 July 10	By Bank By Bank		35,000 5,000
			40,000				40,000
				July 16	By Balance b/d		40,000

Telephone Expenses Account (LF 12)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 11	To Bank		3,500	July 15	By Balance c/d		3,500
			3,500				3,500
July 16	To Balance b/d		3,500

Security Deposit Account (LF 13)

Date	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 11	To Bank		3,500	July 15	By Balance c/d		3,500
			3,500				3,500
July 16	To Balance b/d		3,500

Drawings Account (LF 14)

ate	Particulars	LF	Amount	Date	Particulars	LF	Amount
July 15	To Bank		1,000	July 15	By Balance c/d		1,000
			1,000				1,000
July 16	To Balance b/d		1,000

Trial Balance of SA Impex

SN	Name of Ledgers	LF	Amount Dr	Amount Cr
1	Bank	1	103,500
2	Capital	2		1,60,000
3	Motor bike	3	50,000
4	Office equipment	4	30,000
5	BK Suppliers	5		30,000
6	Purchase	6	1,40,000
7	AK Traders	7		1,20,000
8	Advertising expenses	8	15,000
9	Rent	10	2,000
10	Sales	11		40,000
11	Telephone expenses	12	3,500
12	Security deposits	13	5,000
13	Drawing	14	1,000
	Total		3,50,000	3,50,000