Question 6Q Is it necessary that a trial bal... [FREE SOLUTION]

Chapter 3: Question 6Q (page 127)

Is it necessary that a trial balance be taken periodically? What purpose does it serve?

Short Answer

Expert verified

Yes, it is necessary to prepare the trial balance periodically. The main purpose of preparing a trial balance is to verify whether the entries made in the company's bookkeeping system are mathematically accurate.

Step by step solution

Meaning of trial balance

A trial balance is a statement that depicts the sum total of debits and credits of all the ledger accounts with the purpose of checking the arithmetical accuracy of books of accounts.

Purpose of preparing a trial balance periodically

The necessity of preparing trial balance is as follows:

It examines the correctness of the entries made; it justifies that the debit and credit balances are equal in the ledger.

It supplies a list of ledger balances and their accounts which is beneficial for the preparation of financial statements and for the supply of accounting data of the business.

Therefore, the preparation of trial balance periodically is of great importance for the concern.

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SANTO DESIGN ADJUSTED TRIAL BALANCE DECEMBER 31, 2017
	Dr.	Cr.
Cash	\( 11,350
Accounts Receivable	21,500
Supplies	5,000
Prepaid Insurance	2,500
Equipment	60,000
Accumulated Depreciation鈥擡quipment		\) 35,000
Accounts Payable		5,000
Interest Payable		150
Notes Payable		5,000
Unearned Service Revenue		5,600
Salaries and Wages Payable		1,300
Common Stock		10,000
Retained Earnings		3,500
Service Revenue		61,500
Salaries and Wages Expense	11,300
Insurance Expense	850
Interest Expense	150
Depreciation Expense	7,000
Supplies Expense	3,400
Rent Expense	4,000
	\(127,050	\)127,050

COOKE COMPANY Worksheet For The Month Ended September 30, 2017
	Trial Balance		Adjusted Trial Balance
Account Titles	Dr.	Cr.	Dr.	Cr.
Cash	37,400		37,400
Supplies	18,600		4,200
Prepaid Insurance	31,900		3,900
Land	80,000		80,000
Equipment	120,000		120,000
Accumulated Depreciation鈥擡quipment		36,200		42,000
Accounts Payable		14,600		14,600
Unearned Service Revenue		2,700		700
Mortgage Payable		50,000		50,000
Common Stock		107,700		107,700
Retained Earnings, Sept. 1, 2017		2,000		2,000
Dividends	14,000		14,000
Service Revenue		278,500		280,500
Salaries and Wages Expense	109,000		109,000
Maintenance and Repairs Expense	30,500		30,500
Advertising Expense	9,400		9,400
Utilities Expenses	16,900		16,900
Property Tax Expense	18,000		21,000
Interest Expense	6,000		12,000
Totals	491,700	491,700
Insurance Expense			28,000
Supplies Expense			14,400
Interest Payable				6,000
Depreciation Expense			5,800
Property Taxes Payable				3,000
Totals			506,500	506,500

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Is it necessary that a trial balance be taken periodically? What purpose does it serve?

Short Answer

Step by step solution

Meaning of trial balance

Purpose of preparing a trial balance periodically

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