Page 121 - DCOM101_FINANCIAL_ACCOUNTING_I

Unit 10: Trial Balance

2. Balancing of an account of the ledger. Notes

Example: The total of the debit column of Mohan’s A/c is `8600 and that of credit column
is `6800. The balance calculated is as `1600 while the actual balance is `1800.
3. Wrong posting of any amount in any account.

Example: Goods purchased of `5400 from Rajesh Mohanti was posted to the debit of
Rajesh Mohanti or posted twice to his account or posted to the credit of Rakesh Mohanti.
4. Posting of any account may be in the wrong side of the account.

Example: Sales made to Krishna ` 5000 is transferred to credit side of Krishna’s account
in the ledger.
5. Balance of any account may be omitted in writing in the Trial Balance.

Example: Advertisement account which shows a debit balance is completely omitted
from trial balance.

6. Wrong total of the Trial Balance.
?
Did u know? What is suspense account?
Sometimes, it is not possible to point out errors easily, then the difference is put to an
account, known as suspense account. Suspense A/c is shown in the trial balance. As and
when errors are located, the same is debited or credited for rectifying the error and the
other account which is credited or debited is the suspense account. Thus, the suspense
account is automatically closed.

Case Study
The following balances are extracted from the books of Mr. Rakesh as on 31.12.2005.

` `
Capital 15,000 Purchases 7 ,200
Land & Building 15,600 Provision for bad debts 370
Bank overdraft 2,500 Sales 17,000
Cash in hand 680 Wages 1250
Stock in Trade as on 1.1.04 6,000 Salaries 700
Advertisement 210 Insurance 40
Rent & Taxes 160 Discount allowed 300
Interest & Discount received 300 Repairs to building 210
Debtors 6420 Creditors 4,100
General Expenses 500
Prepare a trial balance.

Hint: Total of Trial Balance ` 39,270.

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