Trial Balance Out of Balance

It is extremely important to find and correct all errors made in the accounting process. A good
time to catch errors is when you create a trial balance.

Shortcuts in Detecting a Single Error

1) Trial Balance difference is a multiple of 10 (10 cents, 1 dollar, $1000, etc)

Action: An addition error has been made - complete steps 1 to 3 below

2) Check to see if the amount of difference is equal to an amount entered in the journal or ledger.

Action: Verify that, that transaction was handled correctly.

3) If difference is an even number amount, divide it by two.

Action: Search journal and ledger for the divided amount. If a debit amount is incorrectly
posted as a credit, it compounds the amount of the error by 2.

4) Check to see if difference is a multiple of 9.

Action: It is likely a transposition error or a decimal error has occurred.

Example: $75.50 was written incorrectly as $57.50

Error amount = $75.50 - $57.50 = $18.

$18 is a multiple of 9.

Sequence of Balancing Steps

Step 1 Re-add trial balance columns
Step 2 Check transfer of account balances from ledger to trial balance
Step 3 Re-add accounts from point of previous balance. Double check account
indicator (ie DR/CR)
Step 4 Check postings from point of previous balance.
Watch for:
 Incorrect amounts
 Amounts not posted
 Amounts posted twice
 Amounts posted in wrong column
Step 5 Check to see that each individual journal entry balances (from point of
previous balance)

Find the error in the example on the following page:

 Trial Balance Out of Balance

Shortcuts in Detecting a Single Error

Sequence of Balancing Steps

Step 1 Re-add trial balance columns
Step 2 Check transfer of account balances from ledger to trial balance
Step 3 Re-add accounts from point of previous balance. Double check account
indicator (ie DR/CR)
Step 4 Check postings from point of previous balance.
Watch for:
 Incorrect amounts
 Amounts not posted
 Amounts posted twice
 Amounts posted in wrong column
Step 5 Check to see that each individual journal entry balances (from point of
previous balance)

Find the error in the example on the following page:

 General Journal page #__1__
Date Particulars P.R. Debit Credit
2004
Apr 15 Bank 5000.--
Truck 12,000.--
T.Alexander, Capital 17,000.--
Opening Entry

17 A/R – D. Oner 250.--

Revenue 250.--
Performed service on account

19 Bank 500.--
Revenue 500.--
Performed service for cash

20 Bank 250.--
A/R – D. Oner 250.--
Received payment on account

The Ledger: Mow-A-Lawn

Account: Bank NO. 105
Date Particulars PR DEBIT CREDIT DR/CR BALANCE
Apr 15 J1 5,000.-- DR 5,000.--
19 J1 500.-- DR 5,500.--
20 J1 250.-- DR 5,750.--

Account: Truck NO. 110

Date Particulars PR DEBIT CREDIT DR/CR BALANCE
Apr 15 J1 12,000.-- DR 12,000.--

Account: T. Alexander, Capital NO. 505

Date Particulars PR DEBIT CREDIT DR/CR BALANCE
Apr 15 J1 17,000.-- CR 17,000.--

Account: A/R – D. Oner NO. 115

Date Particulars PR DEBIT CREDIT DR/CR BALANCE
Apr 17 J1 250.-- DR 250.--
20 J1 250.-- -- -0-

Account: Revenue NO. 510

Date Particulars PR DEBIT CREDIT DR/CR BALANCE

Apr 17 J1 250.-- CR 250.--

19 J1 500.-- CR 750.--
Problem 1

Trial Balance
Debit Credit
5,750 17,000
12,000 750
250

18,000 17,750

Error Difference:

Use shortcuts to find error: #2) Check to see if the amount of difference is equal to an amount
entered in the journal or ledger.

Problem 2

Trial Balance
Debit Credit
5,570 17,000
12,000 750

17,570 17,750

Error Difference:

Use shortcuts to find error: #4) Check to see if difference is a multiple of 9.

Problem 3

Trial Balance
Debit Credit
5,750 17,000
12,000
750

18,500 17,000

Error Difference:

Use shortcuts to find error: 3) If difference is an even number amount, divide it by two.
Problem 1

Trial Balance
Debit Credit
5,750 17,000
12,000 750
250

18,000 17,750

Error Difference: $250

Use shortcuts to find error: Solved using shortcut two. Difference of $250 is found in the journal and ledger. The
amount was incorrectly transferred from A/R account to the trial balance ($250 was transferred over - but $0
should have been).

Problem 2

Trial Balance
Debit Credit
5,570 17,000
12,000 750

17,570 17,750

Error Difference: $180

Use shortcuts to find error: Shortcut #4 was used. $180 is a multiple of 9, indicating a transposition error. The DR
amount of $5570 is incorrect - it should be $5750.

Problem 3

Trial Balance
Debit Credit
5,750 17,000
12,000
750

18,500 17,000

Error Difference: $1,500

Use shortcuts to find error: Shortcut #3 was used. Dividing the error amount ($1,500) by two gives us $750. We
then find that the $750 was incorrectly Debited in the trial balance (it should be a credit).