ACC309/180/166

BALANCING OF THE ACCOUNTS AND TRIAL BALANCE

Balancing of the accounts

Accounts are normally balance off at the end of each month.

Purpose: to check whether all transactions have been recorded correctly based on the double entry rules, and then determine how much is the balance left in each of the account.

DR and CR sides of an account will be compared.

If total DR > total CR, the account is said to have a debit balance.

If total CR > total DR, the account has a credit balance.

If the total DR = the total CR, the account has a zero balanceTrial Balance

A list of all ledger accounts with balances at a particular date, ledger accounts with zero balance are excluded from the trial balance.

Normally prepared at the end of each month.

Purpose: (1)to determine the arithmetical accuracy of the double entry rules, (2) to facilitate the process of preparing the final accounts, and (3) helps to detect errors within a given time period.

Format:

ABC Trading

Trial Balance as at 31 January 19XX

Particulars (Name of accounts)DebitCredit

XXXXXX

TUTORIAL A5Record the following transactions in the appropriate accounts.

Jan. 1Started business with RM500 cash.

3 Bought goods for cash RM75.

3Bought goods on credit from Aman RM120.

8Sold goods for cash RM40.

10Returned goods to Aman RM25.

14Bought stationery by cash RM50.

15Paid Aman by cash RM70.

20Bought office furniture on credit from AS Enterprise RM200.

25Sold goods on credit to Lim RM100.

31Paid salary by cash RM150.

Transactional analysis

AccountsTypeEffectD/EJournal entries

1/1Capital

CashOE

AInc

IncCR

DRDr Cash 500

Cr Capital 500

3/1A

ECR

DR

3/1Cr-Aman

PurchasesInc

IncDr Purchases 120

Cr Cr-Aman 120

8/1A

RDR

CR

10/1Cr-Aman

RODec

DecDr Cr-Aman 25

Cr RO 25

14/1A

ADR

CR

15/1Cr-Aman

CashDec

DecDr Cr-Aman 70

Cr Cash 70

20/1A

LDR

CR

25Dr-Lim

SalesInc

IncDr Dr-Lim 100

Cr Sales 100

31/1A

ECr

DR

LEDGER ENTRIES

Capital

JanRMJanRM

31Bal c/d**5001Cash500

500500

1 FebBal b/d500

Cash

1Capital5003Purchases75

814

15

31

31Bal c/d**195

540540

1/2Balance b/d**195

Purchases

3Cash7531**195

195

1/2Balance b/d**195

Cr-Aman

10253120

1570

31**25

120120

1/2Bal b/d

Sales

318

25

140140

1/2Bal b/d

RO

31

Stationery

14

1/2

AS Ent31

Off Fur

20

1/2

Dr-Lim

25

1/2

Salary

31

1/2

Account Balances

ACCOUNTSA/C CLASSBALANCEACCOUNTSA/C CLASSBALANCE

CapitalOECreditStationeryADebit

CashADebitAS EntLCredit

PurchasesEDebitOff FurnitureADebit

Cr-AmanLCreditDr-LimADebit

SalesRCreditSalaryEDebit

ROE

XXX Trading

Trial Balance as at 31 January xxxx

DEBITCREDIT

Capital500

Cash195

Purchases195

Cr-Aman25

Sales140

RO25

Stationery50

AS Ent200

Off Furniture200

Dr-Lim100

Salary150

890890