The trial balance
A popular type of of question in exams asks students to update a trial balance for a number of postings that correct errors made in the General Ledger.
Illustration 1
A bookkeeper has prepared the following trial balance.
The bookkeeper then identified two errors in the ledgers which will be corrected by the following postings:
| Account | Debit | Credit |
| 1 Sales ledger control | £2,400 | |
| 2 Sales | £2,000 | |
| 3 VAT | £400 | |
| 4 Purchases ledger control | £1,200 | |
| 5 Purchases | £1,000 | |
| 6 VAT | £200 |
Let’s consider the effects of each of these six postings on the trial balance figures.
Posting 1 to the Sales Ledger Control account
The SLCA has a debit balance of £678 and the posting is a debit for £2,400. As both are debits we will add the amounts up to give us the new debit balance of £3,078
Posting 2 to the Sales account
The Sales account has a credit balance of £7,387 and the posting is a credit of £2,000. As both are credits we will add the amounts up to give us the new credit balance of £9,387
Posting 4 to the Purchases Ledger Control account
The PLCA has a debit balance of £303 and the posting is a credit of £1,200. Part of the £1,200 posting will cancel out the debit balance (i.e. £303) and the remainder of £897 will be recorded as the credit balance on this account
Posting 5 to the Purchases account
The Purchases account has a debit balance of £5,997 and the posting is a debit of £1,000. As both are debits we will add the amounts up to give us the new credit balance of £6,997
Postings 3 and 5 to the VAT account
The VAT account has a credit balance of £449, the first posting is a credit of £400 and the second is a debit of £200. We will therefore add the two credits together (£449 plus £400) to give £849 and then deduct the debit of £200 to leave a credit balance of £649
The trial balance will then be updated for the revised figures as shown below (the updated balances are shown in blue)
Illustration 2
The bookkeeper of a business has prepared the following trial balance.
The bookkeeper then identified two errors in the General Ledger
- Motor expenses of £1,830 were accidentally posted to the Vehicles at cost account
- A bank payment of £2,560 to a credit supplier was not recorded
To correct the trial balance for these errors we must first consider the postings required to correct them.
The postings needed to correct the error of principle (i.e. the amount posted to the Vehicles at cost account rather than the Motor expenses account) are as follows:
| Account | Debit | Credit |
| Motor expenses | £1,830 | |
| Vehicles at cost | £1,830 |
The above postings will cause the debit value of the Motor expenses account to increase by £1,830 and the debit value of the Vehicles at cost account to fall by £1,830. The amended trial balance is shown below
Next, the error of omission (i.e. the failure to record the bank payment of £2,560 to a credit supplier) would be corrected using the following postings
| Account | Debit | Credit |
| Purchase ledger control | £2,560 | |
| Bank | £2,560 |
This first line of this posting will reduce the credit balance of the Purchases Ledger Control account by £2,560. The second line also clear the debit balance of the Bank account and create a credit balance of £705
