Adjusted Trial Balance

An Adjusted Trial Balance is a list of the balances of ledger accounts which is created after the preparation of adjusting entries. Adjusted trial balance contains balances of revenues and expenses along with those of assets, liabilities and equities. Adjusted trial balance can be used directly in the preparation of the statement of changes in stockholders' equity, income statement and the balance sheet. However it does not provide enough information for the preparation of the statement of cash flows.

The format of an adjusted trial balance is same as that of unadjusted trial balance.

Example

The following adjusted trial balance was prepared after posting the adjusting entries of Company A to its general ledger and calculating new account balances:

Company A
Adjusted Trial Balance
January 31, 2010
DebitCredit
Cash$20,430
Accounts Receivable5,900
Office Supplies4,320
Prepaid Rent24,000
Equipment80,000
Accumulated Depreciation$1,100
Accounts Payable5,200
Utilities Payable3,964
Unearned Revenue1,000
Interest Payable150
Notes Payable20,000
Common Stock100,000
Service Revenue85,600
Wages Expense38,200
Supplies Expense18,480
Rent Expense12,000
Miscellaneous Expense3,470
Electricity Expense2,470
Telephone Expense1,494
Depreciation Expense1,100
Interest Expense150
Dividend5,000
Total$217,014$217,014

The totals of an adjusted trial balance must be equal. Any difference indicates that there is some error in the journal entries or in the ledger or in the calculations.

The next step of accounting cycle is the preparation of closing entries.

Written by Irfanullah Jan