Methods of Preparing the Trial Balance

Methods of Preparing the Trial Balance

(i) Totals Method: In this method, the totals of debit and credit sides of the ledger accounts are shown in the trial balance. The sum totals of debit and credit columns of the trial balance must be equal. This is less popular method.

(ii) Balances Method: In this method, the balances of ledger accounts are taken to respective debit and credit columns of the trial balance and then grand totals are taken out. The total of balances in the debit column must be equal to the total balances in the credit column of the trial balance.

Specimen of Trial Balance

Trial Balance as at ________

Illustration :

Raju started business on 1st January 2013. You are required to pass entries, in journal & subsidiary books, post them in ledger and prepare trial balance under totals & balances method for January 2013. His transactions for the month were follows:

2013 Rs.

Jan. 1 Cash brought in by Raju as his capital 2,00,000

Furniture purchased on credit from Nuluk Furniture Home 25,000

” 2 Goods purchased from Modi & Sons on credit 61,400

” 3 Goods purchased for cash 35,000

” 4 purchased from Delhi Traders on credit 73,300

” 5 Cash sales 4,600

” 8 Sold goods to Bhatia & Co. on credit 19,860

” 11 Purchased stationery for cash 1,050

” 12 Paid Modi & Sons cash to settle account Received 5%

discount from the firm ……

” 13 Received from Bhatia & Co. in full settlement of account 19,800

” 17 Cash sales 10,700

” 18 Sold on credit to Ganesh & Co. 5,000

” 19 Received cash from Ganesh & Co. 1,000

” 21 Sold on credit to Hoshiar Singh 4,000

” 23 Purchased goods for cash 26,000

” 27 Hoshiar Singh becomes insolvent.

A first and final dividend of ` 3,000 is received from his estate

” 31 Ganesh & Co. pays cash 3,900

” 31 Discount allowed to Ganesh & Co. 100

” 31 Cash paid for rent 2,800

” 31 Depreciation on furniture 250

” 31 Payment to Delhi Traders in full settlement 73,000

Solution:

In the books of Raju

Journal Entries

Date	Particulars	Rs.	Rs.
2013 Jan. 1	Furniture Account Dr.	25,000
	To Nuluk Furniture Home		25,000
	(For furniture purchased on credit from Nuluk Furniture Home)
” 27	Bad Debts Dr.	1,000
	To Hoshiar Singh		1,000
	(Bad debts written off on the insolvency of Hoshiar Singh)
” 31	Depreciation A/c Dr.	250
	To Furniture A/c		250
	(For depreciation provided on Furniture)	__________	___________
	Total	26,250	26,250

Purchases Book
Month : January, 2011

Date	Particulars	Invoice No.	L.F.	Details	Amount (Rs.)
2013 Jan. 2	Modi & Sons Goods				61,400
Jan. 4	Delhi Traders Goods				73,300
	Total				1,34,700

Sales Book
Month : January, 2011

Date	Particulars	Invoice No.	L.F.	Details	Amount (Rs.)
2013 Jan. 8	Bhatia & Co.				19,860
” 18	Gaxnesh & Co.				5,000
” 21	Hoshiar Singh				4,000
					28,860

Dr. Cash Book Cr.

Date	Particulars	L.F.	Discount	Rs.	Date	Particulars	L.F.	Discount	Rs.
2013					2013
Jan. 1	To Capital A/c			2,00,000	Jan. 3	By Purchases			35,000
” 5	” Sales			4,600	” 11	” Stationery			1,050
” 13	” Bhatia & Co.		60	19,800	” 12	” Modi & Sons		3,070	58,330
” 17	” Sales			10,700	” 23	” Purchases			26,000
” 19	” Ganesh & Co.			1,000	” 31	” Rent			2,800
” 27	” Hoshiar Singh			3,000	” 31	” Delhi Traders		300	73,000
” 31	” Ganesh & Co.		100	3,900	” 31	” Balance c/d		_____	46,820
			160	2,43,000				3,370	2,43,000
Feb. 1	To Balance b/d			46,820

Dr. Capital Account Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.

2013 Jan. 31	To Balance c/d		2,00,000	2013 Jan. 1	By Cash		2,00,000
			2,00,000				2,00,000
				Feb. 1	” Balance b/d		2,00,000

Dr. Furniture Account Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
2013 Jan. 1	To Nuluk Furniture Home		25,000	2013 Jan. 31	By Depreciation		250
				”	Balance c/d		24,750
			25,000				25,000
Feb. 1	To Balance b/d		24,750

Dr. Nuluk Furniture Home Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
2013 Jan. 31	To Balance c/d		25,000	2013 Jan. 31	By Furniture		25,000
			25,000				25,000
				Feb. 1	By Balance b/d		25,000

Dr. Modi & Sons Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
2013 Jan. 12	To Cash A/c		58,330	2013 Jan. 2	By Purchases		61,400
	” Discount A/c _		3,070				_________
			61,400				61,400

Dr. Purchases Account Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
2013 Jan. 3	To Cash A/c		35,000	2013 Jan. 31	By Balance c/d		1,95,700
” 23	” Cash A/c		26,000
” 31	” Sundries as per Purchases Book		1,34,700				_______
			1,95,700				1,95,700
Feb. 1	” Balance b/d		1,95,700

Dr. Delhi Traders Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
2013 Jan. 31	To Cash A/c		73,000	2013 Jan. 4	By Purchases		73,300
	” Discount A/c		__300__				________
			73,300				73,300

Dr. Sales Account Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
2013 Jan. 31	To Balance c/d		44,160	2013 Jan. 5	By Cash A/c		4,600
				Jan. 17	” Cash A/c		10,700
			________	Jan. 31	” Sundries as per Sales A/c		28,860
			44,160				44,160
				Feb. 1	By Balance b/d		44,160

Dr. Bhatia & Co. Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
2013				2,013
Jan. 8	To Sales A/c		19,860	Jan. 13	By Cash A/c		19,800
			______		” Discount A/c		60
			19,860				19,860

Dr. Stationery Account Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
20 13 Jan. 11	To Cash A/c		1,050	2013 Jan. 31	By Balance c/d		1,050
			1,050				1,050
Feb. 1	To Balance b/d		1,050

Dr. Ganesh & Co. Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
20 13 Jan. 18	To Sales A/c		5,000	20 13 Jan. 19	By Cash A/c		1,000
				” 31	” Cash A/c		3,900
			_____		” Discount A/c		__100
			5,000				5,000

Dr. Hoshiar Singh Cr.

Date	Particulars	J.F	Rs.	Date	Particulars	L.F.	Rs.
20 13 Jan. 21	To Sales A/c		4,000	20 13 Jan. 27	By Cash A/c		3,000
			______		” Bad Debts A/c		1,000
			4,000				4,000

Dr. Bad Debts Account Cr.

*Date*	*Particulars*	*J.F.*	*Rs.*	*Date*	*Particulars*	*J.F.*	*Rs.*
2013				2013
Jan. 27	To Hoshiar Singh		1,000	Jan. 31	By Balance c/d		1,000
			1 000				1 000
Feb. 1	” Balance b/d		1,000

Dr. Rent Account Cr.

*Date*	*Particulars*	*J.F.*	*Rs.*	*Date*	*Particulars*	*J.F.*	*Rs.*
2013				2013
Jan. 31	To Cash A/c		2,800	Jan. 31	By Balance c/d		2,800
			2,800				2,800
Feb. 1	” Balance b/d		2,800

Dr. Depreciation Account Cr.

*Date*	*Particulars*	*J.F.*	*Rs.*	*Date*	*Particulars*	*J.F.*	Rs.
2013				2013
Jan. 31	To Furniture		250	Jan. 31	By Balance c/d		250
			250				250
Feb. 1	” Balance b/d		250

Dr. Discount Account Cr.

*Date*	*Particulars*	*J.F.*	*Rs.*	*Date*	*Particulars*	*J.F.*	*Rs.*
2013				2013
Jan. 31	To Sundries for			Jan. 31	By Sundries for
	Discount				Discount
	Allowed as per debit side				Received as per
	of Cash Book		160		credit side
					of Cash Book		3,370
” 31	” Balance b/d		3,210
			3,370				3,370

Raju’s Trial Balance
(Totals Method)
as on 31st January, 2011

*SL No.*	*Particulars*	*Debit* *Totals* *Rs.*	*Credit Totals* *Rs.*
1.	Cash	2,43,000	1,96,180
2.	Capital Account		2,00,000
3.	Furniture Account	25,000	250
4.	Nuluk Furniture Home		25,000
5.	Modi & Sons	61,400	61,400

6.	Purchase Account	1,95,700
7.	Delhi Traders	73,300	73,300
8.	Sales Account		44,160
9.	Bhatia & Co.	19,860	19,860
10.	Stationery Account	1,050
11.	Ganesh & Co.	5,000	5,000
12.	Hoshiar Singh	4,000	4,000
13.	Bad Debts Account	1,000
14.	Rent Account	2,800
15.	Depreciation Account	250
16.	Discount Account	160	3,370
		6,32,520	6,32,520

Raju’s Trial Balance
(Balances Method)
as on 31st January, 2011

*SI. No.*	*Particulars*	*Debit Balances* *Rs.*	*Credit Balances* *Rs.*
1.	Cash		46,820
2.	Capital Account		2,00,000
3.	Furniture Account	24,750
4.	Nuluk Furniture Home		25,000
5.	Purchases Account	1,95,700
6.	Sales Account		44,160
7.	Sales Account		44,160
7.	Stationery Account	1,050
8.		1,050
8.	Bad Debts Account	1,000
9.	Rent Account	2,800
10.	Depreciation Account	250
11.	Depreciation Account	250
12.	Discount Account	_________	3,210
12.		2 72 370	2 72 370

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