## Prepare a Trial Balance

### Learning Outcomes

• Prepare a trial balance

Here is the completed ledger for NeatNiks for the month of October:

Date Item Post. Ref. Debit Credit 20– a 0.00 1 GJ1 20,000.00 20,000.00 4 GJ1 12,000.00 8,000.00 15 GJ1 1,500.00 9,500.00 25 GJ1 2,600.00 6,900.00 26 GJ1 1,000.00 5,900.00 30 GJ2 1,600.00 7,500.00 31 GJ2 4,000.00 3,500.00
Date Item Post. Ref. Debit Credit 20– a 0.00 20 GJ1 7,250.00 7,250.00 30 GJ2 1,600.00 5,650.00
Date Item Post. Ref. Debit 20– a 0.00 7 GJ1 2,600.00 2,600.00
Date Item Post. Ref. Debit 20– a 0.00 4 GJ1 12,000.00 12,000.00
Date Item Post. Ref. Debit Credit 20– a 0.00 7 GJ1 2,600.00 2,600.00 26 GJ1 1,000.00 1,600.00
Date Item 20– a 0.00
Date Item Post. Ref. Debit 20– a 0.00 1 GJ1 20,000.00 20,000.00
Date Item Post. Ref. Debit 20– a 0.00 31 GJ2 4,000.00 4,000.00
Date Item Post. Ref. Debit 20– a 0.00 15 GJ1 1,500.00 1,500.00 20 GJ1 7,250.00 8,750.00
Date Item Post. Ref. Debit 20– a 0.00 25 GJ1 1,500.00 1,500.00
Date Item Post. Ref. 20– a 0.00 0.00
Date Item Post. Ref. 20– a 0.00 0.00
Date Item Post. Ref. Debit 20– a 0.00 25 GJ1 1,100.00 1,100.00

When we wrote our journal entries, if we made sure that debits were equal to credits, and if we posted those journal entries exactly as they were writing, then it would be mathematically impossible for the total debits to not equal total credits in the ledger. There’s an easy way to check this: run a trial balance.

First, list all the ledger accounts.

Put all the debit balances in one column, and all the credit balances in another, and compare the totals, like this:

NeatNiks
For the month ended October 31, 20XX
Reference No. Accounts Debits Credits
110 Checking 3,500.00
120 Accounts Receivable 5,650.00
125 Supplies 2,600.00
130 Prepaid Rent 12,000.00
210 Account Payable 1,600.00
220 Contractor Payable
310 Nick Frank, Capital Contributions 20,000.00
330 Nick Frank, Withdrawals 4,000.00
410 Service Revenue 8,750.00
510 Insurance Revenue 1,500.00
520 Rent Expense
530 Supplies Expense
540 Contractor Expense 1,100.00
Totals Single line 30,350.00
Double line
Single line 30,350.00
Double line

Once you have determined that total debits equals total credits, you can start to look at the accuracy of individual accounts. Just because the trial balance is in balance, doesn’t mean everything is correct. For instance, you could have posted a journal entry completely backward or left one out. In addition, we may need to make some additional journal entries. We should have a rent expense for October, some supplies expense, and we owe our independent contractors some payments too. We’ll cover these adjusting journal entries in the next section, and then we’ll be ready to produce some financial statements.