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Economic and management sciences

Grade 9

Business, consumer and financial knowledge and skills

Module 23

Drawing up a trial balance

Section 3: Trial balance

ACTIVITY1:

To draw up a trial balance

[LO 3.3]

Once the ledger accounts have been completed, the accounts are closed and transferred to a Trial Balance.

Accounts that have entries only on the debit or credit side, are simply added up to obtain a total.

In the case of accounts that have entries on the debit as well as the credit side, the balance is calculated. This means a balance that is the difference between the two sides is calculated. For example:

Bank Account
2003 2003
Nov. 30 Total received CRJ 20 698 00 Nov. 30 Total payments CPJ 15 633 00
30 Balance b/f 5 065 00
20 698 00 20 698 00
Des. 1 Balance c/f 5 065 00

The balances carried forward and the totals are transferred to the Trial Balance.

  • A Trial Balance is a list of balances and totals compiled to determine whether the debit side and credit side are equal and by so doing to check whether the double-entry principle was applied to every transaction.

Although the Trial Balance indicates that a credit entry was done for every debit entry, certain errors will not be shown up by the Trial Balance. Thererfore a Trial Balance that balances cannot always be accepted as proof of correctness.

  • Below is an example of a Trial Balance.

TRIAL BALANCE OF RANDOM STORES AS AT 30 JUNE 2003

Dt. Cr.
Balance sheet section
Capital B1 199 322
Withdrawals B2 15 000
Land and Buildings B3 105 000
Vehicles B4 28 000
Equipment B5 32 125
Trading inventory B6 45 310
Debtors control B7 12 180
Bank B8 11 754
Change B9 600
Petty cash B10 250
Creditors control B11 15 994
Nominal Account section
Sales N1 350 000
Selling costs N2 250 000
Rates and Taxes N3 4 210
Insurance N4 3 850
Water and Electricity N5 4 952
Telephone N6 4 810
Stationery N7 2 750
Repairs N8 5 325
Wages N9 18 000
Salaries N10 26 000
Rental income N11 4 800
Totals 570 116 570 116

ASSIGNMENT 1 : Trial Balance

  • Use the completed ledger accounts of Enslin Dealers (Activity 3.6 Assignment 9).
  • Calculate the balances on the accounts, calculate totals and draw up a Trial Balance.

ASSIGNMENT 2 : Auxiliary Journals, Ledger and Trial Balance

  • P. Hatting starts his own business, Hatting Dealers, on 1 April 2003 with a capital contribution of R105 000.

1. Record the transactions for April in the following auxiliary journals: CRJ 3.7.1, CPJ 3.7.1, DJ 3.7.1 and CJ 3.7.1

2. Close the journals at the end of the month

3. Transfer to the ledger accounts and indicate folio numbers

4. Calculate the balances, or totals where necessary

5. Draw up a trial balance at the end of April

  • Transactions : April 2003
  • Duplicates of receipts issued
DATE TO WHOM ISSUED, FOR AMOUNT
2003
April 1 P. Hatting, for capital contribution R105 000
7 V. Jansen, to pay his debt R 660
Blommie Bloemiste, for rental income R 500
14 D. Coetzee, payment on account R 300
21 G. Ferreira, payment on account R 200
28 V. Jansen, to pay the amount of the invoice issued on 17 April R 246
  • Cash sales of goods as per cash-register roll
DATE SALES SELLING COSTS
2003
April 7 R5 800 R4 600
17 R3 820 R2 440
21 R7 620 R5 740
28 R1 944 R1 406
  • Cash received for services provided

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Source:  OpenStax, Economic and management sciences grade 9. OpenStax CNX. Sep 15, 2009 Download for free at http://cnx.org/content/col11074/1.1
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