{"id":1440,"date":"2015-07-05T18:12:03","date_gmt":"2015-07-05T18:12:03","guid":{"rendered":"https:\/\/courses.candelalearning.com\/finaccountingxmaster\/?post_type=chapter&p=1440"},"modified":"2017-08-22T19:34:49","modified_gmt":"2017-08-22T19:34:49","slug":"preparing-an-adjusted-trial-balance","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-finaccounting\/chapter\/preparing-an-adjusted-trial-balance\/","title":{"raw":"Preparing an Adjusted Trial Balance","rendered":"Preparing an Adjusted Trial Balance"},"content":{"raw":"\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Accounting Cycle\u00a0\u00a0<\/strong><\/td>\r\n<\/tr>\r\n
1.\u00a0 Analyze Transactions<\/td>\r\n5.\u00a0 Prepare Adjusting Journal Entries<\/td>\r\n9.\u00a0 Prepare Closing Entries<\/td>\r\n<\/tr>\r\n
2.\u00a0 Prepare Journal Entries<\/td>\r\n6.\u00a0 Post Adjusting Journal Entries<\/strong><\/td>\r\n10.\u00a0 Post Closing Entries<\/td>\r\n<\/tr>\r\n
3.\u00a0 Post journal Entries<\/td>\r\n7.\u00a0 Prepare Adjusted Trial Balance<\/strong><\/td>\r\n11. Prepare Post-Closing Trial Balance<\/td>\r\n<\/tr>\r\n
4.\u00a0 Prepare Unadjusted Trial Balance<\/td>\r\n8.\u00a0 Prepare Financial Statements<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nIn our detailed accounting cycle, we just finished step 5 preparing adjusting journal entries.\u00a0 The next step is to post the adjusting journal entries.\u00a0 We will use the same method of posting (ledger card or T-accounts) we used for step 3 as we are just updating the balances.\u00a0 Remember, you do not change your journal entries for posting -- if you debit in an entry you debit when you post.\u00a0 After we post the adjusting entries, it is necessary to check our work and prepare an adjusted trial balance<\/strong>.\r\n\r\nhttps:\/\/youtu.be\/gwP0Pcm5C4I\r\n\r\nLet's look at the company we have been using in our examples MicroTrain.\u00a0 The unadjusted trial balance is as follows:\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
<\/td>\r\nDebit<\/td>\r\nCredit<\/td>\r\n<\/tr>\r\n
Cash<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 10,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Accounts Receivable<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 20,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Supplies<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 8,500<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Prepaid Insurance<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,400<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Trucks<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 40,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Accounts Payable<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 25,000<\/td>\r\n<\/tr>\r\n
Unearned Revenue<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4,500<\/td>\r\n<\/tr>\r\n
Common Stock<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 35,000<\/td>\r\n<\/tr>\r\n
Retained Earnings<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 6,100<\/td>\r\n<\/tr>\r\n
Service Revenue<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 30,000<\/td>\r\n<\/tr>\r\n
Salaries Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 18,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Rent Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,200<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Utilities Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 500<\/td>\r\n<\/td>\r\n<\/tr>\r\n
TOTALS<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 100,600<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 100,600<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe adjusting entries from the previous examples are:\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
<\/td>\r\n<\/td>\r\nDebit<\/strong><\/td>\r\nCredit<\/strong><\/td>\r\n<\/tr>\r\n
1) Dec 31<\/td>\r\nAccounts Receivable<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 5,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 Service Revenue<\/td>\r\n<\/td>\r\n\u00a0 5,000<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record December accrued revenue.<\/em>\u00a0\u00a0\u00a0<\/em>\u00a0<\/em><\/td>\r\n<\/tr>\r\n
2) Dec 31<\/td>\r\nInterest Receivable<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0600<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 Interest Revenue<\/td>\r\n<\/td>\r\n\u00a0 600<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record December accrued interest revenue.<\/em>\u00a0\u00a0\u00a0<\/em>\u00a0<\/em><\/td>\r\n<\/tr>\r\n
3) Dec 31<\/td>\r\nSalaries Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 360<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 Salaries Payable<\/td>\r\n<\/td>\r\n\u00a0 360<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record salaries earned but not paid.<\/em>\u00a0\u00a0\u00a0<\/em>\u00a0<\/em><\/td>\r\n<\/tr>\r\n
4) Dec 31<\/td>\r\nUnearned Revenue<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,500<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 Service Revenue<\/td>\r\n<\/td>\r\n\u00a0 1,500<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record deferred revenue now earned.<\/em>\u00a0\u00a0\u00a0<\/em>\u00a0<\/em><\/td>\r\n<\/tr>\r\n
5) Dec 31<\/td>\r\nInsurance Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0200<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0 Prepaid Insurance<\/td>\r\n<\/td>\r\n\u00a0 200<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record one month of insurance expired.<\/em>\u00a0\u00a0\u00a0<\/em>\u00a0<\/em><\/td>\r\n<\/tr>\r\n
6) Dec 31<\/td>\r\nSupplies expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0 7,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Supplies<\/td>\r\n<\/td>\r\n\u00a0 7,000<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record supplies used.\u00a0\u00a0\u00a0\u00a0<\/em><\/td>\r\n<\/tr>\r\n
7) Dec 31<\/td>\r\nDepreciation Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0750<\/td>\r\n<\/td>\r\n<\/tr>\r\n
<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Accumulated Depreciation - Trucks<\/td>\r\n\u00a0 750<\/td>\r\n<\/tr>\r\n
<\/td>\r\nTo record one month of depreciation.<\/em>\u00a0\u00a0\u00a0<\/em>\u00a0<\/em><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nWe can post these transactions using T-accounts or ledger cards.\u00a0 We are using the same posting accounts as we did for the unadjusted trial balance just adding on.\u00a0 Click Adj T-accounts<\/a>\u00a0to see the full posting.\u00a0 Notice how we start with the unadjusted trial balance in each account and add any debits on the left and any credits on the right.\r\n\r\nOnce the posting is complete and the new balances have been calculated, we prepare the adjusted trial balance<\/strong>.\u00a0 As before, the adjusted trial balance is a listing of all accounts with the ending balances and in this case it would be adjusted balances.\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
<\/td>\r\nDebit<\/strong><\/td>\r\nCredit<\/strong><\/td>\r\n<\/tr>\r\n
Cash<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 10,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Accounts Receivable<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 25,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Interest Receivable<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 600<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Supplies<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,500<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Prepaid Insurance<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,200<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Trucks<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 40,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Accum. Depreciation-Trucks<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 750<\/td>\r\n<\/tr>\r\n
Accounts Payable<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 25,000<\/td>\r\n<\/tr>\r\n
Unearned Revenue<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3,000<\/td>\r\n<\/tr>\r\n
Salaries Payable<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 360<\/td>\r\n<\/tr>\r\n
Common Stock<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 35,000<\/td>\r\n<\/tr>\r\n
Retained Earnings<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 6,100<\/td>\r\n<\/tr>\r\n
Service Revenue<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 36,500<\/td>\r\n<\/tr>\r\n
Interest Revenue<\/td>\r\n<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 600<\/td>\r\n<\/tr>\r\n
Salaries Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 18,360<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Rent Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,200<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Utilities Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 500<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Insurance Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Supplies Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 7,000<\/td>\r\n<\/td>\r\n<\/tr>\r\n
Depreciation Expense<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 750<\/td>\r\n<\/td>\r\n<\/tr>\r\n
TOTALS<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 107,310<\/td>\r\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 107,310<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe next step in the accounting cycle would be to complete the financial statements.\r\n\r\n ","rendered":"\n\n\n\n\n\n\n
Accounting Cycle\u00a0\u00a0<\/strong><\/td>\n<\/tr>\n
1.\u00a0 Analyze Transactions<\/td>\n5.\u00a0 Prepare Adjusting Journal Entries<\/td>\n9.\u00a0 Prepare Closing Entries<\/td>\n<\/tr>\n
2.\u00a0 Prepare Journal Entries<\/td>\n6.\u00a0 Post Adjusting Journal Entries<\/strong><\/td>\n10.\u00a0 Post Closing Entries<\/td>\n<\/tr>\n
3.\u00a0 Post journal Entries<\/td>\n7.\u00a0 Prepare Adjusted Trial Balance<\/strong><\/td>\n11. Prepare Post-Closing Trial Balance<\/td>\n<\/tr>\n
4.\u00a0 Prepare Unadjusted Trial Balance<\/td>\n8.\u00a0 Prepare Financial Statements<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In our detailed accounting cycle, we just finished step 5 preparing adjusting journal entries.\u00a0 The next step is to post the adjusting journal entries.\u00a0 We will use the same method of posting (ledger card or T-accounts) we used for step 3 as we are just updating the balances.\u00a0 Remember, you do not change your journal entries for posting — if you debit in an entry you debit when you post.\u00a0 After we post the adjusting entries, it is necessary to check our work and prepare an adjusted trial balance<\/strong>.<\/p>\n