AS WE enter this week’s lesson, we must remember that at the end of an accounting period a schedule known as the trial balance is prepared to compare the total of all debit balances and the total of all credit balances. This is made possible since every transaction results in an equal amount of debits and credits in the ledger. The total of the debit entries MUST equal the total of the credit entries in the ledger.
WORKED EXAMPLE 1
The following trial balance for Rosie Raymond Co Ltd features certain accounts that have been recorded incorrectly; hence, it does not balance.
WORKED EXAMPLE 2
You are required to: a. Record the following transactions in the ‘T’ accounts of BestLook Dry Cleaners Company. b. Prepare a trial balance as at December 31, 2016. 1. Opened a business bank account with $36,000. 2. Purchased supplies for cash $660. 3. Purchased equipment from Hilary Cleaning Equipment Co Ltd for $10,500, paying $4,500 in cash and the balance on account. 4. Paid the rent for the month $1,275. 5. Cash sales for the month $5,550. 6. Paid salaries of $1,125. 7. Paid $1,500 on account to Hilary Cleaning Equipment Co Ltd. 8. The cost of supplies used was determined to be $180.
This is where we end for this week. Join us next week as we continue to complete the syllabus. Grasp the concepts and retain them. You will need them as you progress to excellence. See you next week.
WORKED EXAMPLE 2A
WORKED EXAMPLE 2B Best-Look Dry Cleaners Company Ltd Trial Balance as at December 31, 2016
Rosie Raymond Co Ltd Trial balance at December 31, 2016 You are required to: Prepare a corrected trial balance.
Rosie Raymond Co Ltd Corrected trial balance at December 31, 2016