Accounting Practices 501 Chapter 8 Adjusted Trial Balance Cathy Saenger, Senior Lecturer, Eastern Institute of Technology © Pearson 2011

Adjusted Trial Balance Ch8F - Adj Trial Balance 2 An adjusted trial balance shows at one glance the status of a trial balance after balance day adjustments have been done The following is an example of balance day adjustments done directly on the trial balance Each entry would have been done in the General Journal first

Extract from trial balance at year end - 20X2 BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 3 The above is a trial balance extract before balance day adjustments have been made

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 4 1. Closing inventory is $5,000 (last year’s inventories becomes this year’s opening stock) Opening inv 6000 Closing inv Extract from trial balance at year end - 20X2

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 5 Opening inv 6000 Closing inv Owner took products for own use $80 (GST excl) GST collected12 (taken off Purchases) Extract from trial balance at year end - 20X2

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 6 Opening inv 6000 Closing inv GST collected12 3. Prepaid rent $ Prepaid Rent (taken off Rent expense) Extract from trial balance at year end - 20X2

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 7 Opening inv 6000 Closing inv GST collected Prepaid Rent 4. Outstanding wages $300 Accrued wages 300 (added to Wages expense) Extract from trial balance at year end - 20X2

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 8 Opening inv 6000 Closing inv GST collected Prepaid Rent Accrued wages Interest due but not received $ Accrued Interest 100 (added to Interest income) Extract from trial balance at year end - 20X2

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 9 Opening inv 6000 Closing inv GST collected Prepaid Rent Accrued wages Accrued Interest 100 We now calculate the adjusted trial balance after balance day adjustments Extract from trial balance at year end - 20X2

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 10 Opening inv 6000 Closing inv GST collected Prepaid Rent Accrued wages Accrued Interest Remember that each adjustment would be a General Journal entry Extract from trial balance at year end - 20X2

BeforeAdjust- ments After DrCrDrCrDrCr Inventories (‘X1) 6000 Purchases8000 Rent2000 Wages1000 Interest300 Drawings500 Ch8F - Adj Trial Balance 11 Opening inv 6000 Closing inv GST collected Prepaid Rent Accrued wages Accrued Interest The figures from the adjusted trial balance (After) are now used to prepare the financial statements Extract from trial balance at year end - 20X2