The balances of the ledger accounts are recorded on a separate sheet under the debit and credit columns, and the totals are matched to preparing trial balance. The balances from the cash book are also included in this. There are three methods for preparing a trial balance. The descriptions of these three methods are given below.
1. Unadjusted trial balance,
2. Adjusted trial balance,
3. Post-closing trial balance.
After transferring the ledger balance to the trial balance, which balance go on the debit side and which go on the credit side are shown below.
Items to be Debited:
1. Assets: Such as land, buildings, leases, property, machinery, equipment, furniture, investments, accounts receivable, debtors, bank deposits, initial stock, and cash will be debited.
2. Expenses: Such as wages, salaries, printing expenses, advertisement expenses, rent, repairs, office expenses, business expenses, paid interest, paid commission.
3. Payments are made: Such as owner’s withdrawals, purchase of goods.
4. Losses: Such as theft, loss, robbery, depreciation, bad debt, discounts given.
5. Advance Payments: Such as advance salaries, rent, wages.
6. Other Items: Such as sales returns, creditor discounts, reserves, loans given, accrued income.
Items to be Credited:
1. Liabilities: Such as promissory notes, mortgage loans, creditors, bills payable, bank overdrafts.
2. Income or Profits: Such as received interest, received discounts, investment interest, intern’s fees.
3. Accrued Expenses: Such as accrued salaries, wages, rent.
4. All Types of Reserves: Such as bad debt accumulation, debtor discounts, advance income.
5. Interest on Properties: Such as investment interest, loan interest, bank deposit interest.
6. Money Received: Such as sale of goods, capital introduced, purchase returns.
Trial Balance: mathematical problems and solutions
Example: The following accounts are taken from the ledger of XYZ LLC at December 31, 20XX.
Notes Payable – 20,000
Owners, Equity – 25,000
Equipment – 80,000
Owners, Drawing – 8,000
Salaries Expense – 38,000
Service Revenue – 88,000
Cash – 6,000
Supplies – 5,000
Supplies Expense – 2,000
Salaries Payable – 3,000
Accounts Payable – 11,000
Accounts Receivable – 8,000
Here is the Trial Balance of XYZ LLC.
