A Simple Trial Balance Exercise (With Full Solution)
by Saya Darya
Before you begin:It's important for testing and exams to make sure you not only answer questions correctly but also complete them fast enough. Grab a pen and piece of paper and time yourself while attempting this exercise.
Difficulty Rating: Beginner --> Intermediate
Time limit: 12 minutes
This is a nice, simple trial balance exercise with full solution. Try attempt this yourself before scrolling down to the solution below. See the related questions and tutorials links at the bottom for more topics and questions related to this exercise.
Q: The following transactions have been journalized and posted to the proper accounts:
i. Edward Wilson invested $8,000 cash in his new landscaping business. ii. The business paid the first month's rent with $300 cash. iii. The business purchased equipment by paying $2,000 cash and executing a note payable for $3,000. iv. The business purchased supplies for $200 cash. v. The business billed clients for a total of $1,000 for design services rendered. vi. The business received $750 cash from clients for services rendered above. vii. The owner took a withdrawal of $2,000.
Prepare the trial balance.
Some notes and explanations on the above:
i. This affects capital (part of owner's equity) and the cash accounts. ii. Rent is recorded for $300 and cash reduces by this amount. iii. Cash reduces by $2,000 here and a note payable (liability) is recorded for $3,000. The full value of the equipment is therefore $5,000, the total of cash paid and the amount owed. iv. Supplies are recorded for $200 and cash reduces by this amount. v. Services rendered (income) is recorded for $1,000 but since it says that clients were billed (and not that the cash was received), this means it is owed to our business. So we record $1,000 accounts receivable (asset). vi. $750 additional cash recorded and the accounts receivable above is reduced by that amount. vii. Drawings are recorded for $2,000 and cash reduces by this amount.
Hope that trial balance exercise and solution helps you in your studies!
Best, Michael Celender Founder of Accounting Basics for Students