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3.4: The Adjusted Trial Balance

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    • Contributed by Henry Dauderis and David Annand
    • Athabasca University
    • Sourced from Lyryx Learning

    learning objective

    LO3 – Prepare an adjusted trial balance and explain its use.

    In the last section, adjusting entries were recorded and posted. As a result, some account balances reported on the January 31, 2015 unadjusted trial balance in Figure 2 have changed. Recall that an unadjusted trial balance reports account balances before adjusting entries have been recorded and posted. An adjusted trial balance reports account balances after adjusting entries have been recorded and posted. Figure 3.5.1 shows the adjusted trial balance for BDCC at January 31, 2015.

    In Chapters 1 and 2, the preparation of financial statements was demonstrated using BDCC's unadjusted trial balance. We now know that an adjusted trial balance must be used to prepare financial statements.

    Big Dog Carworks Corp.

    Adjusted Trial Balance

    At January 31, 2015

    Account Balance
    Account Debit Credit
    Cash $3,700
    Accounts receivable 2,400
    Prepaid insurance 2,200
    Equipment 3,000
    Accumulated depreciation – equipment $ 25
    Truck 8,000
    Accumulated depreciation – truck 100
    Bank loan 6,000
    Accounts payable 700
    Interest payable 18
    Unearned repair revenue 100
    Income tax payable 500
    Share capital 10,000
    Dividends 200
    Repair revenue 10,700
    Depreciation expense – equipment 25
    Depreciation expense – truck 100
    Rent expense 1,600
    Insurance expense 200
    Interest expense 18
    Salaries expense 3,500
    Supplies expense 2,000
    Truck operation expense 700
    Income tax expense 500

    Total debits and credits

    $28,143 $28,143

    Figure \(\PageIndex{1}\): BDCC's January 31, 2015 Adjusted Trial Balance

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