# Methods of Prepration of Trial Balance

There are three methods of preparation of trial balance:

1. Total method
2. Balance method
3. Total and balance method

Now we shall understand each method in detail with logic and illustration as follows:

1. TOTAL METHOD

Under this method, every ledger account is totaled and that total amount (both of debit side and credit side) is transferred to trial balance. In this method, trial balance can be prepared as soon as ledger account is totaled. Time taken to balance the ledger accounts is saved under this method as balance can be found out in the trial balance itself. The difference of totals of each ledger account is the balance of that particular account. This method is not commonly used as it cannot help in the preparation of the financial statements

Suppose following ledger balances are provided to us and we have to prepare trail balance:

Cash A/c

 Dr. Cr. Date2013 Particular J.F. \$ Date2013 Particular J.F. \$ Jan 1 To balance b/d 8000 Jan 1 By Purchase A/c 3800 Jan 15 To Robert 300 Jan 8 By Plant A/c 300 Jan 18 To Sales A/c 1000 Jan 31 By balance c/d 5200 9300 9300 Feb 1 To balance b/d 5200

Bank A/c

 Dr. Cr. Date Particular J.F. \$ Date Particular J.F. \$ Jan 1 To balance b/d 20000 Jan 31 By Balance c/d 20000 20000 20000 Feb 1 To balance c/d 20000

Stock A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 1 To balance b/d 20000 Jan 31 By balance c/d 20000 20000 20000 Feb 1 To Balance b/d 20000

Building A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 1 To balance b/d 10000 Jan 31 By Balance c/d 10000 10000 10000 Feb 1 To Balance b/d 10000

Rita A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 1 To balance b/d 2000 Jan 31 By Balance c/d 2000 2000 2000 Feb 1 To Balance b/d 2000

Albert’s A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 31 To balance c/d 5000 Jan 1 By Balance b/d 5000 5000 5000 Feb 1 By Balance b/d 5000

Capital A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 31 To balance c/d 55000 Jan 1 By Balance b/d 55000 55000 55000 Feb 1 By Balance b/d 55000

Purchase A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 1 To cash A/c 3800 Jan 31 By balance c/d 4000 To Discount A/c 200 4000 4000 Feb 1 To balance b/d 4000

Discount A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 1 By Purchases A/c 200 Jan 31 To balance c/d 200 200 200 Feb 1 By Balance b/d 200

Plant A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 8 To Michael A/c 5000 Jan 31 By Balance c/d 5300 Jan 8 To Cash A/c 300 5300 5300 Feb 1 To Balance b/d 5300

Michael’s A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 31 To balance c/d 5000 Jan 8 By plant A/c 5000 5000 5000 Feb 1 By balance b/d 5000

Sales A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 31 To balance c/d 1600 Jan 12 By Robert 600 Jan 18 By Cash 1000 1600 1600 Feb 1 By Balance b/d 1600

Robert’s A/c

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 12 To Sales A/c 600 Jan 15 By Cash A/c 300 Jan 15 By Bad Debts A/c 300 600 600

 Date Particular J.F. \$ Date Particular J.F. \$ Jan 15 To Robert 300 Jan 31 By Balance c/d 300 300 300 Feb 1 To balance b/d 300

Solution

Trial Balance

 Sr. No. Name of Account Total Debit Total Credit 1 Cash 9300 4100 2 Bank 20000 3 stock 20000 4 Building 10000 5 Rita 2000 6 Albert 5000 7 Capital 55000 8 Purchase 4000 9 Discount 200 10 Plant 5300 11 Michael 5000 12 Sales 1600 13 Bad Debts 300 70900 70900
1. BALANCE METHOD

Under this method, every ledger account is balanced and those balances only are carry forward to the trial balance. This method is used commonly by the accountants and helps in the preparation of the financial statements. Financial statements are prepared on the basis of the balances of the ledger accounts.

Trial Balance

 Sr. No. Name of Account Debit Balance Credit Balance 1 Cash 5200 2 Bank 20000 3 stock 20000 4 Building 10000 5 Rita 2000 6 Albert 5000 7 Capital 55000 8 Purchase 4000 9 Discount 200 10 Plant 5300 11 Michael 5000 12 Sales 1600 13 Bad Debts 300 66800 66800
1. TOTAL AND BALANCE METHOD

Under this method, the above two explained methods are combined. Under this method statement of trial balance contains seven columns instead of five columns.

Trial Balance

 Sr. No. Name of Account TotalDebit TotalCredit DebitBalance CreditBalance 1 Cash 9300 4100 5200 2 Bank 20000 20000 3 stock 20000 20000 4 Building 10000 10000 5 Rita 2000 2000 6 Albert 5000 5000 7 Capital 55000 55000 8 Purchase 4000 4000 9 Discount 200 200 10 Plant 5300 5300 11 Michael 5000 5000 12 Sales 1600 1600 13 Bad Debts 300 300 70900 70900 66800 66800