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

ParticularJ.F.$Date

2013

ParticularJ.F.$
 Jan 1To balance b/d8000 Jan 1By Purchase A/c3800
Jan 15To Robert300 Jan 8By Plant A/c300
Jan 18To Sales A/c1000 Jan 31 By balance c/d5200
93009300
Feb 1To balance b/d5200

 

Bank A/c

Dr.Cr.
DateParticularJ.F.$DateParticularJ.F.$
 Jan 1To balance b/d 20000Jan 31By Balance c/d20000
2000020000
Feb 1To balance c/d20000

Stock A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 1To balance b/d 20000 Jan 31By balance c/d20000
2000020000
 Feb 1To Balance b/d20000

Building A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 1To balance b/d10000 Jan 31By Balance c/d 10000
10000 10000
 Feb 1To Balance b/d 10000

 

Rita A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 1To balance b/d 2000 Jan 31By Balance c/d2000
20002000
Feb 1To Balance b/d2000

Albert’s A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 31To balance c/d 5000 Jan 1By Balance b/d5000
50005000
 Feb 1By Balance b/d5000

Capital A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 31To balance c/d55000 Jan 1By Balance b/d 55000
 55000 55000
 Feb 1By Balance b/d55000

 

Purchase A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 1To cash A/c 3800 Jan 31By balance c/d 4000
To Discount A/c200
 4000 4000
Feb 1To balance b/d4000

Discount A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 1By Purchases A/c200
Jan 31To balance c/d200
 200200
Feb 1By Balance b/d200

Plant A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 8To Michael A/c5000Jan 31By Balance c/d5300
 Jan 8To Cash A/c300
5300 5300
Feb 1To Balance b/d5300

 

Michael’s A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 31To balance c/d5000 Jan 8By plant A/c5000
 50005000
 Feb 1By balance b/d5000

Sales A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 31To balance c/d1600 Jan 12By Robert600
 Jan 18By Cash1000
 16001600
Feb 1By Balance b/d1600

Robert’s A/c

DateParticularJ.F.$DateParticularJ.F.$
 Jan 12To Sales A/c600 Jan 15By Cash A/c300
Jan 15By Bad Debts A/c300
 600600

 

Bad Debts

DateParticularJ.F.$DateParticularJ.F.$
 Jan 15To Robert300Jan 31By Balance c/d300
 300 300
 Feb 1To balance b/d300

Solution

Trial Balance

Sr. No.Name of AccountTotal DebitTotal Credit
1Cash93004100
2Bank20000
3stock20000
4Building10000
5Rita2000
6Albert5000
7Capital55000
8Purchase4000
9Discount200
10Plant5300
11Michael5000
12Sales1600
13Bad Debts300
7090070900
  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
1Cash5200
2Bank20000
3stock20000
4Building10000
5Rita2000
6Albert5000
7Capital55000
8Purchase4000
9Discount200
10Plant5300
11Michael5000
12Sales1600
13Bad Debts300
6680066800
  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 AccountTotal

Debit

Total

Credit

Debit

Balance

Credit

Balance

1Cash930041005200
2Bank2000020000
3stock2000020000
4Building1000010000
5Rita20002000
6Albert50005000
7Capital5500055000
8Purchase40004000
9Discount200200
10Plant53005300
11Michael50005000
12Sales16001600
13Bad Debts300300
70900709006680066800

 

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