From the Following balances from the Books of Mohan as on 31st March, 2008, prepare a Trial Balance.1) Mohan's Capital Rs. 6,0002) Purchases Rs. 8,0003) Rent paid Rs. 2404) Mohan's Drawings Rs. 1,2005)Bills Receivable 4006)Opening Stock 1,0007)Purchase Returns 2808)Sales Return 1609)Plant & Machienary 3,00010)Sales 9,60011)Sundry Debtors 5,60012)Furniture 50013)Salaries 72014)Sundry Creditors 5,60015)Carriage 10016)Insurance 4017)Cash in hand 10018)Cash at Bank 1,95019)Commission paid 4020)Bills payable 1,58021)Discount Received 3022)Discount Allowed 40
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[Please have a look at the Attachment, regarding the Solution of this question].
Following are the nature of the balances of the various accounts :—
1) As all Assets have debit balances, their balances should be shown on the debit side of the trial balance. Assets include Cash, bills receivable, Debtors, furniture, Machienary, buildings, Goodwill etc.
2) As all liabilities have credit balances, their balances should be shown on the credit side of the trial balance. Liabilities include Bills payable, Creditors, Bank loan etc.
3) Bank account may show a debit balance or credit balance. When the bank account shows a debit balance, it means that cash is available in the bank. If it shows credit balance, it means bank overdraft.
4) Capital account shows a credit balance, So it is written on the credit side of the trial balance.
5) Drawings account shows a debit balance, So it is written on the debit side of the trial balance.
6) Purchase Account always shows a debit balance.
7) purchase Return account always shows a credit balance.
8) Sales Account always shows a credit balance.
9) Sales Return account always shows a debit balance.
10) All expenses and losses show debit balance, as such they should be written on the debit side of the trial balance.
11) All incomes and gains show credit balance, as such they should be written on the credit side of the trial balance.
12) Opening Stock shows a debit balance. But, Closing stock will not appear in the trial balance.
Following are the nature of the balances of the various accounts :—
1) As all Assets have debit balances, their balances should be shown on the debit side of the trial balance. Assets include Cash, bills receivable, Debtors, furniture, Machienary, buildings, Goodwill etc.
2) As all liabilities have credit balances, their balances should be shown on the credit side of the trial balance. Liabilities include Bills payable, Creditors, Bank loan etc.
3) Bank account may show a debit balance or credit balance. When the bank account shows a debit balance, it means that cash is available in the bank. If it shows credit balance, it means bank overdraft.
4) Capital account shows a credit balance, So it is written on the credit side of the trial balance.
5) Drawings account shows a debit balance, So it is written on the debit side of the trial balance.
6) Purchase Account always shows a debit balance.
7) purchase Return account always shows a credit balance.
8) Sales Account always shows a credit balance.
9) Sales Return account always shows a debit balance.
10) All expenses and losses show debit balance, as such they should be written on the debit side of the trial balance.
11) All incomes and gains show credit balance, as such they should be written on the credit side of the trial balance.
12) Opening Stock shows a debit balance. But, Closing stock will not appear in the trial balance.
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