Exercises: Equal totals: checking the balance
Explain in your own words what a trial balance is and why it is prepared at the end of a period. Include in your explanation why, if every entry was recorded correctly,…
Explain in your own words what a trial balance is and why it is prepared at the end of a period. Include in your explanation why, if every entry was recorded correctly, the sum of the debit balances must equal the sum of the credit balances.
Using the following balances of the stationery shop «El Compás», build its trial balance (one column of debit balances and one of credit balances), write the total of…
Using the following balances of the stationery shop «El Compás», build its trial balance (one column of debit balances and one of credit balances), write the total of each column, and conclude whether the trial balance checks out:
| Account | Balance | Nature |
|---|---|---|
| Bank | $\$37,050.00$ | debit |
| Merchandise | $\$20,500.00$ | debit |
| Rent expense | $\$7,000.00$ | debit |
| Suppliers | $\$14,300.00$ | credit |
| Owner's capital | $\$35,000.00$ | credit |
| Sales | $\$15,250.00$ | credit |
Also: if the two totals did not match, what would that tell you about how the transactions were recorded?
During its first month, the taco shop «El Fogón Norte» carried out these transactions: 1. The owner contributed $\$60,000.00…
During its first month, the taco shop «El Fogón Norte» carried out these transactions:
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The owner contributed $\$60,000.00$ in cash to start the business.
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It bought merchandise on credit for $\$15,000.00$.
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It sold products for cash for $\$22,000.00$.
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It paid $\$8,000.00$ to its suppliers.
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It paid $\$4,500.00$ for the shop's rent.
- a) Record the five transactions in the journal (in each entry state which account is debited and which is credited, with the amount).
- b) Post the movements to the ledger and compute the balance of each account.
- c) Prepare the trial balance and verify that the debit and credit totals match.