Setting Up a Working Trial Balance

A trial balance ensures that the total of all debit balances in the general ledger (GL) is equal to the total of all credit balances. The example on page 3 is for illustrative purposes only.

Step-by-Step Process:

1. Trial Balance Column:

   • List each GL account title and/or number.
   • Record each balance in either the “Debit” or “Credit” column.

2. Adjustments Column:

   • Enter the amount of adjustment for each income or expense account in the appropriate column.
   • Ensure that the total of all debits and credits in the Adjustments column are equal.

3. Adjusted Trial Balance Column:

   • Enter all GL account balances, regardless of adjustments.
   • Verify that the total of debits and credits are equal.

4. Income Statement:

   • Transfer all revenue and expense account balances to the “Income Statement” column (refer to the top of page 3).
   • The total debits will not equal the total credits here.
   • The difference represents either net income (net credit amount) or net loss (net debit amount).

5. Balance Sheet:

   • Transfer all asset, liability, and owner’s equity account balances to the Balance Sheet column.
   • Record net income as a credit and net loss as a debit.
   • Ensure that the total debits equal the total credits.

Example of Manual Working Trial Balance:

This table outlines the format to follow for organizing your accounts and ensuring the balances are correctly maintained.