Preparation of Trial Balance

A Trial Balance is a statement that shows the total debit and total credit balances of accounts. The total of debit amounts shall be equal to the credit amounts. It thus verifies the arithmetical accuracy of the postings in the ledger accounts. We will now study the methods of Preparation of Trial Balance – totals method, balance method and total-cum-balance method.

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Preparation of Trial Balance

We can prepare the Trial Balance in the following three ways:

1] Totals Method

In this totals method, we ascertain the total of each side in the ledger i.e. debit and credit, separately and show them in the respective columns in the Trial Balance. Here also the total of the column with debit totals should tally with the total of the column of the credit totals. The dual aspect concept holds true in this case also.

However, totals method is not in use widely as it does not determines the accurate balances of the accounts and thus, also does not help in the preparation of the Financial statements or final accounts.

2] Balances Method

In this method, we total the debit side and the credit side of the accounts and balance them. We then write these debit or credit balances of the ledger accounts in the respective debit and credit columns in the Trial Balance. A trial balance tallies when the total of the debit column is equal to the total of the credit column.

This method is the most common method as it shows the net effect and also helps in the preparation of the financial statements. Usually, in the trial balance instead of showing the individual accounts of the debtors and creditors, we show Sundry Debtors and Sundry Creditors accounts, respectively.

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3] Totals-cum-Balances Method

In this method, we prepare four columns. In two columns we write debit and credit totals of accounts and in the other two columns, we write the debit and credit balances of accounts. This method consumes a lot of time and is a duplicate of work. Hence, it is rarely in use.

Solved Example for You

Q: From the following information prepare trial balance using all the three methods.

Capital A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To balance c/d	150000		Apr 1	By Cash A/c	140000
				Sep 1	By Cash A/c	10000
		150000				150000

Cash A/c

Date	Particulars	Amount		Date	Particulars	Amount
Apr 1	To Capital A/c	140000		Mar 31	By Salary A/c	40000
Sep 1	To Capital A/c	10000		Mar 31	By Bank A/c	50000
				Mar 31	By Drawings A/c	10000
				Mar 31	By balance c/d	50000
		150000				150000

Salary A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To Cash A/c	40000		Mar 31	By balance c/d	40000
		40000				40000

Drawings A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To Cash A/c	10000		Mar 31	By balance c/d	10000
		10000				10000

Bank A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To Cash A/c	50000		Jan 1	By Furniture A/c	30000
				Mar 31	By balance c/d	20000
		50000				50000

Furniture A/c

Date	Particulars	Amount		Date	Particulars	Amount
Jan 1	To Bank A/c	30000		Mar 31	By balance c/d	30000
		30000				30000

Purchases A/c

Date	Particulars	Amount		Date	Particulars	Amount
May 1	To Ram’s A/c	50000		Mar 31	By balance c/d	100000
Nov 25	To Amit’s A/c	20000
Feb 15	To Shyam’s A/c	30000
		100000				100000

Ram’s A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To balance c/d	50000		May 1	By Purchases A/c	50000
		50000				50000

Amit’s A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To balance c/d	20000		Nov 25	By Purchases A/c	20000
		20000				20000

Shyam’s A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To balance c/d	30000		Feb 15	By Purchases A/c	30000
		30000				30000

Sales A/c

Date	Particulars	Amount		Date	Particulars	Amount
Mar 31	To balance c/d	70000		Jun 15	By Ajit’s A/c	40000
				Nov 24	By Dipu’s A/c	30000
		70000				70000

Ajit’s A/c

Date	Particulars	Amount		Date	Particulars	Amount
Jun 15	To Sales A/c	40000		Mar 31	By balance c/d	40000
		40000				40000

Dipu’s A/c

Date	Particulars	Amount		Date	Particulars	Amount
Nov 24	To Sales A/c	30000		Mar 31	By balance c/d	30000
		30000				30000

Answer:

1] Totals Method

Trial Balance as at…..

Name of the account	L.F.	Debit Total	Credit Total
Capital			150000
Cash		150000	100000
Drawings		10000
Bank		50000	30000
Salary		40000
Furniture		30000
Purchases		100000
Ram			50000
Amit			20000
Shyam			30000
Sales			70000
Ajit		40000
Dipu		30000
Total		450000	450000

 2] Balances Method

Trial Balance as at…..

Name of the account	L.F.	Debit Amount	Credit Amount
Capital			150000
Cash		50000
Drawings		10000
Bank		20000
Salary		40000
Furniture		30000
Purchases		100000
Ram			50000
Amit			20000
Shyam			30000
Sales			70000
Ajit		40000
Dipu		30000
Total		320000	320000

 3] Totals-cum- Balances Method

Trial Balance as at…..

Name of the account	L.F.	Debit Total	Credit Total	Debit Amount	Credit Amount
Capital			150000		150000
Cash		150000	100000	50000
Drawings		10000		10000
Bank		50000	30000	20000
Salary		40000		40000
Furniture		30000		30000
Purchases		100000		100000
Ram			50000		50000
Amit			20000		20000
Shyam			30000		30000
Sales			70000		70000
Ajit		40000		40000
Dipu		30000		30000
Total		450000	450000	320000	320000