3.4: The Adjusted Trial Balance

Last updated
Save as PDF

Page ID: 20082

Henry Dauderis and David Annand
Athabasca University via Lyryx Learning

$ \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } $ $ \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} $$\newcommand{\id}{\mathrm{id}}$ $ \newcommand{\Span}{\mathrm{span}}$ $ \newcommand{\kernel}{\mathrm{null}\,}$ $ \newcommand{\range}{\mathrm{range}\,}$ $ \newcommand{\RealPart}{\mathrm{Re}}$ $ \newcommand{\ImaginaryPart}{\mathrm{Im}}$ $ \newcommand{\Argument}{\mathrm{Arg}}$ $ \newcommand{\norm}[1]{\| #1 \|}$ $ \newcommand{\inner}[2]{\langle #1, #2 \rangle}$ $ \newcommand{\Span}{\mathrm{span}}$ $\newcommand{\id}{\mathrm{id}}$ $ \newcommand{\Span}{\mathrm{span}}$ $ \newcommand{\kernel}{\mathrm{null}\,}$ $ \newcommand{\range}{\mathrm{range}\,}$ $ \newcommand{\RealPart}{\mathrm{Re}}$ $ \newcommand{\ImaginaryPart}{\mathrm{Im}}$ $ \newcommand{\Argument}{\mathrm{Arg}}$ $ \newcommand{\norm}[1]{\| #1 \|}$ $ \newcommand{\inner}[2]{\langle #1, #2 \rangle}$ $ \newcommand{\Span}{\mathrm{span}}$$\newcommand{\AA}{\unicode[.8,0]{x212B}}$

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