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.
Date

2013

Particular J.F. $ Date

2013

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

 

Bad Debts

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 Total

Debit

Total

Credit

Debit

Balance

Credit

Balance

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

 

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