Chapter 4.4:Trial Balance

LedgerA “book” storing all accountsTotal of all debit balance accounts equal total

of all credit balance accounts

Supplies

A/R

850

750

Cash Bank Loan

A/P

800

2000 1900

J. Yogi, Capital

900

Methods of Taking Off a Trial BalanceStep 1: List all the accounts and their

balances. Leave room for a 3-line heading

Step 2: Place the debit balances in a debit balances in a debit column and credit balances in a credit column.

Step 3: Add up the two columns.Step 4: See if the two columns are the

same (balances).Step 5: Write a heading on the top (Who,

What, When)

Trial BalanceChecks accuracy of the ledgerAccount balances may still be incorrect

Debit CreditCash $750Accounts Receivable 2000Supplies 850Accounts Payable $800Bank Loan 1900J. Yogi, Capital 900

$3,600 $3,600

Yogi CompanyTrial Balance

March 31, 2005

Trial Balance ErrorsIf a ledger does not balance, follow these four steps:1. Re-add the trial balance accounts2. Check the figures from the ledger

against those of the trial balance. Make sure none are missing or on the wrong side or for the wrong account.

3. Recalculate the account balances.4. Check that there is a balanced

accounting entry in the accounts for each transaction.

•Find the difference between debits and credit totals•If 1, 10, 100, etc. may be adding error on trial balance or accounts•Check for difference in an account balance•Divide difference by 2, meaning an account balance on wrong side on trial balance•If difference is divisible by 9 with no remainder, transposition error made, e.g. 72 not 27•Missing entry from journal to ledger•Re-check!

Trial Balance Errors