An adjusted trial balance is the one that is prepared just after making the adjusting entries at the end of the period. This trial balance includes all the adjustments regarding deferral or accrual of the expenses or incomes. Let us understand this with the help of some examples of adjusting entries. Let us suppose that the following adjustments have been made at the end of the accounting period.
Click here for the unadjusted trial balance:
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- Accrue salary to the workers for $2,000 at the end of the period
- Accrue interest payable on bonds at the end of the period for $40,000
- Record depreciation expense on equipment at 20% and 10% on building.
- Accrue rent and utility expenses for the last month of the period for $4,000 and $2,000 respectively.
- Prepaid expenses include a prepaid payment for insurance expenses of $4,000 which has expired at the end of the period.
Now, we can show these adjustments and finally the adjusted trial balance as follows:
| Unadjusted trial balance | Adjustment | Adjusted trial balance | ||||
| Account titles | Debit | Credit | Debit | Credit | Debit | Credit |
| Cash | 74,500 | 74,500 | ||||
| Accounts Receivable | 75,900 | 75,900 | ||||
| Prepaid expenses | 8,500 | 4,000 | 4,500 | |||
| Inventory | 52,000 | 52,000 | ||||
| Short term investment | 126,100 | 126,100 | ||||
| Equipment | 150,000 | 150,000 | ||||
| Accumulated depreciation – Equipment | 60,000 | 30,000 | 90,000 | |||
| Building | 350,000 | 350,000 | ||||
| Accumulated depreciation – Building | 70,000 | 35,000 | 105,000 | |||
| Accounts payable | 60,500 | 60,500 | ||||
| Salary Payable | 2,000 | 2,000 | ||||
| Bonds payable | 160,000 | 160,000 | ||||
| Interest payable | 40,000 | 40,000 | ||||
| Rent payable | 4,000 | 4,000 | ||||
| Utilities expense payable | 2,000 | 2,000 | ||||
| Common stock | 50,000 | 50,000 | ||||
| Additional paid in capital – Common stock | 225,000 | 225,000 | ||||
| Retained earnings | 72,000 | 72,000 | ||||
| Dividend | 15,000 | 15,000 | ||||
| Treasury Stocks | 5,000 | 5,000 | ||||
| Revenue | 1,400,000 | 1,400,000 | ||||
| Cost of goods sold | 1,150,000 | 1,150,000 | ||||
| Salary expenses | 24,500 | 2,000 | 26,500 | |||
| Rent expenses | 44,000 | 4,000 | 48,000 | |||
| Utilities expenses | 22,000 | 2,000 | 24,000 | |||
| Depreciation expense | 65,000 | 65,000 | ||||
| Insurance expense | 4,000 | 4,000 | ||||
| Interest expense | 40,000 | 40,000 | ||||
| Total | 2,097,500 | 2,097,500 | 117,000 | 117,000 | 2,210,500 | 2,210,500 |
