ST. RAPHAEL COLLEGE OF BUSINESS AND ARTS INC.

Manuel L. Quezon Ave. Poblacion Uno Real, Quezon

Email: st.raphael_college@yahoo.com
Tel. No.: (042) 536-6428 | CP no.: 0961-0645-030

SENIOR HIGH SCHOOL

DEPARTMENT

Quarter 3 – Module 11:

Preparing trial balance
Learning Competencies:
30. Illustrate the procedure on preparing trial balance
31. Identify errors on trial balance

Learning Objectives

S L M-SRCBAI PROPERTY
 SENIOR HIGH SCHOOL

This module was designed to help you demonstrate an understanding the

procedure on preparing trial balance and how to identify errors in preparing it.

Review Last Lesson

The previous chapter illustrated the different approach in periodic and

perpetual inventory systems and illustrate making value-added tax entries.

LEARNING COMPETENCY NO. 30

Illustrate the procedure on preparing trial balance

Lesson Proper

The trial balance is a list of all accounts with their respective debit or credit
balances.
It is prepared to verify the equality of debits and credits in the ledger at the end of
each accounting period or at any time the postings are updated.
The procedures in the preparation of a trial balance follow:
1. List the account titles in numerical order.
2. Obtain the account balance of each account from the ledger and enter the
debit balances in the debit column and the credit balances in the credit
column.
3. Add the debit and credit columns.
4. Compare the totals.
The trial balance is a control device that helps minimize accounting errors. When
the totals are equal, the trial balance is in balance.
This equality provides an interim proof of the accuracy of the records but it does
not signify the absence of errors.
For example, if the bookkeeper failed to record payment of rent, the trial balance
columns are equal but in reality, the accounts are incorrect since rent expense is
understated and cash overstated. The trial balance for the illustration follows:

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FL Computer Services
Trial Balance
November 30, 2018
Cash 182,250
Accounts Receivable 7,500
Supplies 1,000
Prepaid Insurance 21,000
Vehicles 300,000
Equipment 54,000
Notes Payable 100,000
Accounts Payable 1,000
Unearned Revenues 13,000
F. Loren, Capital 450,000
F. Loren, Withdrawals 5,000
Service Income 37,500
Salaries Expense 4,000
Advertising Expense 1,750

LEARNING COMPETENCY NO. 31

Identify errors on trial balance

Lesson Proper

LOCATING ERRORS
An inequality in the totals of the debits and credits would automatically signal the
presence of an error. These errors include:
1. Error in posting a transaction to the ledger:
a. An erroneous amount was posted to the account.
b. A debit entry was posted as a credit or vice versa.
c. A debit or credit posting was omitted.
2. Error in determining the account balances:
a. A balance was incorrectly computed.
b. A balance was entered in the wrong balance column.
3. Error in preparing the trial balance:
a. One of the columns of the trial balance was incorrectly added.
b. The amount of an account balance was incorrectly recorded on the
trial balance.
c. A debit balance was recorded on the trial balance as a credit or vice
versa, or a balance was omitted entirely.

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What is the most efficient approach in locating an error? The following procedures
when done in sequence may save considerable time and effort in locating errors:
1. Prove the addition of the trial balance columns by adding these columns in
the opposite direction.
2. If the error does not lie in addition, determine the exact amount by which
the trial balance is out of balance. The amount of the discrepancy is often a
clue to the source of the error. If the discrepancy is divisible by 9, this
suggests either a " transposition” (reversing the order of numbers) error or a
slide (moving of the decimal point). For example, assume that the cash
account balance is P21,750, but in copying the balance Into the trial
balance the figures are transposed and written as P21,570. The resulting
error amounted to P180 and is divisible by 9. Another common error is the
slide, or incorrect placement of the decimal point, as when P21,750.00 is
copied as P2,175.00, The resulting discrepancy in the trial balance will also
be an amount divisible by 9,
Assume that the office equipment account has a debit balance of P42,000 but it is
erroneously listed in the credit column of the trial balance. This will cause a
discrepancy of two times P42,000 or P84,000 in the trial balance totals. Since
such errors as recording a debit in a credit column are common, it is advisable,
after determining the discrepancy in the trial balance totals, to scan the columns
for an amount equal to exactly one-half of the discrepancy.
It is also advisable to look over the transactions for an item of the exact amount of
the discrepancy. An error may have been made by recording the debit side of the
transaction and forgetting to enter the credit side.
3. Compare the accounts and amounts in the trial balance with that in the
ledger. Be certain that no account is omitted.
4. Recompute the balance of each ledger account.
5. Trace all postings from the journal to the ledger accounts. As this is done,
place a check mark in the journal and in the ledger after each figure is
verified. When the operation is completed, look through the journal and the
ledger for unchecked amounts. In tracing postings, be alert not only for
errors in amount but also for debits entered as credits, or vice versa.
Note that even when a trial balance is in balance, the accounting records may still
contain errors. A balanced trial balance simply proves that, as recorded, debits
equal credits. The following errors are not detected by a trial balance:
1. Failure to record or post a transaction.
2. Recording the same transaction more than once.
3. Recording an entry but with the same erroneous debit and credit amounts.
4. Posting a part of a transaction correctly as a debit or credit but to the wrong
account.

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 SENIOR HIGH SCHOOL

Activity/ Exercise

Preparing a Trial Balance

The ledger of Daria Tolentino Advertising and Publicity contained the following
account balances as at Oct. 31, 2018:
Cash 160,000
Accounts Receivable 426,000
Prepaid Insurance 36,000
Equipment 524,000
Accounts Payable 245,000
Tolentino, Capital 765,000
Tolentino, Withdrawals 562,000
Advertising Revenues 964,000
Public Relations Revenues 425,000
Salaries Expense 520,000
Rent Expense 90,000
Supplies Expense 40,000
Utilities Expense 24,000
Miscellaneous Expense 17,000

Required:
Prepare a trial balance.

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Challenge
Fundamentals of Accountancy, Business and Management 1
Grade 11 – MODULE NO.11

Learner Name: _______________________________________ DATE: ___________

Grade & Section: _______________________________________ SCORE: __________

Effects of errors on the trial balance.

Several errors were found in the accounting records of the Jennifer Perez Machine
Shop during the month of August 2018:
a. The debits in the ledger account Accounts Receivable were correctly added
to a total of P132,000. The credits were correctly added to P121,000. The
balance of the Accounts Receivable account on the trial balance was
P10,000.
b. Office Supplies were acquired for P67,000. The entry was recorded as a debit
to Office Supplies for P67,000 and a credit to Accounts Payable for P76,000.
c. Repair Equipment was acquired for P78,750 at month-end and recorded as
a debit to Prepaid Insurance and a credit to cash for P78,750.
d. Repair services were rendered on account, P24,750. The entry was recorded
as a debit to Accounts Receivable for P26,750 and a credit to Repair
Revenues for P26,750.
Required: For each of these errors:
1. Prepare the trial balance (5 points)
2. Indicate whether or not the trial balance will balance. (5 points)
3. If the trial balance will not balance, decide whether the debit or the credit
column will show the larger total. (5 points)
4. Tell the most likely reason for the error's discovery. (10 points)

Answer Key

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Preparing a Trial Balance

The ledger of Daria Tolentino Advertising and Publicity contained the following
account balances as at Oct. 31, 2018:
Cash 160,000
Accounts Receivable 426,000
Prepaid Insurance 36,000
Equipment 524,000
Accounts Payable 245,000
Tolentino, Capital 765,000
Tolentino, Withdrawals 562,000
Advertising Revenues 964,000
Public Relations Revenues 425,000
Salaries Expense 520,000
Rent Expense 90,000
Supplies Expense 40,000
Utilities Expense 24,000
Miscellaneous Expense 17,000

Required:
Prepare a trial balance.

Daria Tolentino Advertising and Publicity

Trial Balance
October 31, 2018

160,00
Cash
0
426,00
Accounts Receivable
0
Prepaid Insurance 36,000
524,00
Equipment
0
245,00
Accounts Payable
0
765,00
Tolentino, Capital
0
562,00
Tolentino, Withdrawals
0
964,00
Advertising Revenues
0
425,00
Public Relations Revenues
0
520,00
Salaries Expense
0
Rent Expense 90,000
Supplies Expense 40,000

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Utilities Expense 24,000

Miscellaneous Expense 17,000
2,399, 2,399,
000 000

References

 Ballada, W. Accounting Fundamentals Made Easy; DomDane Publishers & Made

Easy Books, 2019
 Arganda, A.M. Accounting Principles 1 Textbook/Workbook;
National Bookstore, 2007

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