Fix Trial Balance Errors: 3 Tips to Correct an 'Unbalanced' Trial Balance
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Fix Trial Balance Errors: 3 Tips to Correct an 'Unbalanced' Trial Balance
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Time Markers:
1) Introduction 0:11
2) Double Check 0:31
3) Divide by 9 1:14
4) Divide by 2 3:10
5) Conclusion 4:40
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HAVE AN TRIAL BALANCE THAT DOESN'T BALANCE? See if any of these tips help...
3 TIPS TO FIX AN UNBALANCED TRIAL BALANCE
3 Solutions to Common Trial Balance Errors
INTRODUCTION
There are 3 very common errors that cause unbalanced trial balances. We will go through the solutions to these:
1) “The Double Check”
2) “Divide by 9”
3) “Divide by 2”
And we’ll run through and example with each...
1) DOUBLE CHECK
Please double check you have all the ledger accounts actually within the trial balance.
Without every account a trial balance will NEVER balance
And our example...
Debits:
Cash 20
PPE 170
Accounts Receivable 80
TOTAL 270
Credits:
Accounts Payable 30
TOTAL 30
1) DOUBLE CHECK
Debits:
Cash 20
PPE 170
Accounts Receivable 80
TOTAL 270
Accounts Payable 30
Loan 240
TOTAL 270
2) DIVIDE BY 9
Take your out-of-balance amount and divide it by 9.
If the amount is evenly divisible by 9, you may have made:
a) ‘Transposition’ Error (e.g. treating $76 as $67 or $23 as $32).
b) ‘Slide’ Error (e.g. treating $400 as $40 or $90 as $900).
In this case: trace back trial balance amounts to ledger account amounts.
And our example...
Debits:
Cash 24
PPE 175
Accounts Receivable 83
TOTAL 282
Credits:
Accounts Payable 13
Loan 251
TOTAL 264
2) DIVIDE BY 9
Out-of-balance amount:
282 - 264 = 18
Divide by 9
18 / 9 = 2.0
Trace back trial balance amounts to ledger account amounts.
It turns out we treated Accounts Payable as ’13’ when it should be ’31'.
Debits:
Cash 24
PPE 175
Accounts Receivable 83
TOTAL 282
Credits:
Accounts Payable 31
Loan 251
TOTAL 264
3) DIVIDE BY 2
Take your out-of-balance amount and divide it by 2.
If the amount is evenly divisible by 2, you may have made:
Treated a debit account as a credit, or a credit account as a debit.
In this case: trace back trial balance accounts to ledger accounts.
And our example...
Debits:
Cash 24
Accounts Receivable 83
TOTAL 107
Credits:
Accounts Payable 31
PPE 175
Loan 251
TOTAL 457
3) DIVIDE BY 2
Out-of-balance amount:
457 - 107 = 350
Divide by 2
350 / 2 = 175.0
Trace back trial balance amounts to ledger account amounts.
It turns out we treated PPE as a credit when it is a debit account.
Debits:
Cash 24
Accounts Receivable 83
PPE 175
TOTAL 282
Credits:
Accounts Payable 31
Loan 251
TOTAL 282
CONCLUSION What we covered:
1) “Double Check”
2) “Divide by 9”
3) “Divide by 2”
Feedback or Further Assistance? Get in Contact Good luck & best of success!... and don’t stress :-)
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