CHAPTER THREE

TRIAL BALANCE
Introduction
When all the transactions have been recorded in their respective ledgers, there will be
numerous books of accounts. It would be difficult to tell at a spar of a moment, which accounts
has what balance. A trial balance would help put this in perspective. A trial balance is a
statement showing the list of debit and credit balances of accounts. It is a check on the
arithmetical accuracy of the double entry regarding the business transactions at a given period
of time. The total of items recorded in all the accounts on the debit side of the books should be
equal in total with the items in all the accounts on the credit side of the books. All the debit
balances are listed in one column and all the credit balances listed in another. The totals of
these two columns should be identical.
Objectives :
After studying this ch!ter you shou"d be b"e to:
Identify the !ur!ose of tri" b"nce
Estb"ish the e"e#ents in tri" b"nce
E$trct tri" b"nce fro# "edgers%
E$ercise #ore on "edger entries "eding to tri" b"nce
&ey ter#s:
Tri" B"nce: A statement of the list of debit and credit balances of accounts used as a
check on the arithmetical and procedural accuracy of the double entry.
Pur!ose of tri" B"nce
A trial balance is an attempt to check the accuracy of the double entry in the ledger accounts.
Given that every credit entry should have a corresponding debit entry, then a difference in the
trial balance is an indication of eistence of errors that may have been made in the ledgers.
!owever it must be noted that though the total of all the credit entries should agree with the
total of all the debit entries, this does not necessarily guarantee the accuracy of the entries in
the ledger accounts.
'tructure of tri" b"nce
A trial balance has two sides, the debit and the credit side. The debit side summari"es all debit
balance figures while the credit side summari"es all credit balance figures in the ledgers.
T#IA$ %A$A&'(
)# '#
Assets
(
(penses
Income *e.g. sales+
,urchases
'apital
$iabilities

To make this process simple the accounts should be balanced off so as to get their balances at
the end of the financial period. The balancing of accounts involves the following steps.
i+ Add amounts on both sides of the accounts.
ii+ -ind the difference between the two sides by deducting the lesser amount from the greater
amount of the two sides.
The difference between the two sides is called .the balance/ and in accounting procedure
should be inserted on the side having the lesser amount so as to balance the two sides. This
process leads to a common terminology in accounting, that is balance carried forward *or
carried down+ written in short as balance c0f *or balance c0d+. A second term is balance brought
forward *or balance brought down+ denoted as balance b0f *or balance b0d+ . %alance carried
forward *or down+ is the balancing figure at end of the accounting period. It is the difference in
amounts between the two sides of the accounts at the end of the accounting period. %alance
brought forward *or down+ on the other hand is the balance in the account at the beginning of
the accounting period.
The balance brought forward is used to tell whether the account has a debit balance or a credit
balance. If the account is having its balance brought down on the debit side, it is said to have
debit balance and if it is on the credit side, it is said to have a credit balance.

E$#!"e (
1r 2anyekini had following transactions for the month ended 34
st
)ecember
5667.
a+ 8tarted business with a cheque of shs 56666.
b+ %ought good for sale cash shs 9666
c+ ,aid rent shs 5666
d+ 8old goods for shs 46666.
Re)uired
%alance off the Accounts from the following transactions and etract a trial balance.
*
E$#!"e *
:abali 1usa started a retail shop on 4
st
:anuary 5667 with a capital of sh 3,;66,666.
)uring the month he carried out the following transactions.
:an 5, put 2sh 5,<66,666 of the cash into a bank account
,, 3, bought goods for cash 2sh 4;6,666
,, 7, bought goods on credit from &yambura 2sh 396,666, 1. 2isoi 2sh 7=6,666, ,.
>tieno 2sh 446,666 1utoko 2sh 376,666.
,, ;, bought stationery on credit form seal honey ltd. 2sh 4?6,666.
,, 9, sold goods on credit to@ Wakarindi 2sh =6,666 ,into gama 2sh 4;6,666 !assan
miko 2sh 4=6,666 ,etero 2sh 496,666
,, <, paid electricity by cheque 2sh ;;,666
,, 46, bought -urniture on credit from 8upremes ltd 2sh 7<6,666
,, 44, paid 8alaries and Wages in cash 2sh 456,666
,, 47, returns goods to 1. 2isoi 2sh 76A ,. >tieno 2sh 96,666
,, 4;, bought motor vehicle by cheque 2sh ?66,666
,, 49, Acquired a loan from 8hailoki by cheque 2sh 966,666
,, 4<, goods returned to us by@ Wakarindi 2sh 56,666 !assan miko 2sh 76,666
,, 54, cash sales 2sh =6,666
,, 57, sold goods on credit to @ ,into gama 2sh 466,666 ,etero 2sh 376,666 1uugu"i
2sh 44;,666.
,, 59 paid the following by cheque@ 2isoi 2sh 7;6,666, ,. >tieno 2sh ;6,666
,, 5=, received cheque from@ 1uugu"i 2sh 44;,666 ,into gama 2sh 5;6,666.
,, 36, received a further loan form 8hailoki by cash 2sh 566,666
,, 36, received 2sh ;66,666 cash from ,etero.
#equired@ ,ass the accounting entries in the appropriate ledger accounts, balance them as at
34
st
:anuary and etract a trial as at that date.
+uestion One
Bsing information in question three of chapter two, etract a trial balance.
+uestion t,o%
The following are the transactions of 2iminCa.
8tarted business on 4st :anuary 5667 with 8h 9;6,666
:an 5 ,aid cash for stationery sh. ;666 and postage 8h 35;6.
:an 3 %ought furniture for cash sh ;6,666 and machinery for sh <6,666
:an 7 ,urchased goods for cash sh 476,666
:an ; 8old goods for cash sh <66,666
:an < ,urchased goods from 1una enterprises, sh 444,666 on credit
:an 46 ,aid rent for the year sh 376,666
:an 46 %ought 'omputer for sh 5;,666 from 'omptech ltd on credit.
:an 45 8old goods on credit to Wikali for sh 456,666D
-
:an 43 8old goods to 2amau for sh 556,666 on credit
:an 4? Withdrew for personal use sh 556,666
:an 56 ,aid general epenses shillings 46,666
:an 55 #eceived from 2amau sh ;4,=66
:an 53 'ash sales sh 4;,=66
:an 53 'ash purchases sh 45,666
:an 57 ,aid 1una shillings =6,666
:an 5; %ought goods worth sh 366,666 from 1aleck on credit and supplied them to %ibilu for
sh 376,666 credits.
Re)uired@ )raw the books of accounts and etract the trial balance as at 34st :anuary 5667
+uestion three
1rs 1utiso started a small trading business in 2aratina on 4
st
march 5667 with capital
amounting to shillings 49,666.
Transactions were as follows@
1ar. 5. %ought goods on credit from 1unya worth sh 46,666
1ar.; ,aid rent an amount of sh 5666
1ar ; 8old goods at sh 5;,666
1ar 9 )eposit sh =,666 into bank account.
1ar 9 %ought stock worth shillings 5;,666 on credit from 2inyanCui
1ar 9 8old goods on credit to ACuma sh. 76,666
1ar ? )rew for personal use sh 4666
1ar. < #eceived from ACuma for sh. 36,=66 being part payment of
Goods sold on credit
1ar 46 'ash sales amounting 2sh. 35,666
1ar. 44 ,aid advance wages cash 2sh. 4; 666
1ar45 %ought goods worth sh ;6,666 on credit from 2ikio ltd
1ar 43. ,aid 1unyua a supplier for his account for sh <,666
1ar 4; %ought goods for sale 'ash 2sh 49,666
1ar 56 'ash sales 2sh ;;,666
1ar 54 ,aid 2ikio shillings 5;,666
1ar55 ,aid for office epenses sh 55,666
1ar 53 sold goods on credit 8iwaka sh 5?,666 and uwe"o sh 55,;66
1ar 57 ,aid 2inyanCui sh 56,666.
1ar. 5; 'ash sales amounting 2sh. 7;,666
1ar 59 #eceived from uwe"o for sh 55,;66
1ar 5< 8iwaka paid his account for sh 56,666
1ar 36 'ash sales shillings 4;,666
1ar 36 ,aid balances of wages 2sh 4;,666 cash
1ar. 34
st
'ash purchases sh 45,666
Re)uired@ )raw the relevant accounts and etract a trial balance as at 34
st
march 5667.
.
+uestion /our
2imata started a business on 4st :uly 5667 by investing sh 566,666 deposited in the bank
account and shillings ;6,666 of his furniture.
Transactions during the month were as follows@
4 ,aid rent for :uly of 2sh 476;6 by cheque.
5+ drew shillings 76,666 from bank for office use
3 ,aid 2sh44966 cash of renovations of premises.
< ,aid 2sh?666 cheque for advertisements.
43 %ought goods for sale on credit from 1au"o ltd at 2sh 536,666
47 8old goods sh. 456,666 cash.
47 ,aid wages of 2sh36,=66. by cheque
4; Withdrew 2sh;,336 from the business for personal use.
4; ,aid (lectricity of 2sh 3666 cash
49 )eposit shillings ;6,666 to bank account
4= ,urchased goods for sale on credit from %iashara 2sh. 476,666
4= sold goods worth shillings 566,666 to 2iCana on credit
56 ,aid 2sh453,3=6 to mau"o ltd.
56 ,aid cash maintenance service cost of 2sh <46 and sh 4566 for cleaning the office.
53 #eceived shillings 466,666 by cheque from 2iCana
5; ,aid 2sh3;66 for telephone .
5= ,urchased a computer at for 2sh36,666 by cheque.
36 ,aid 2sh 4;66 for a threeEmonth insurance policy.
34 cash sales shillings 456,666
Re)uired@ )raw the necessary ledger entries and (tract the trial balance as at 34st :uly 5667.
0