Accounting: The Language of Business - Vol. 2 (Intermediate: Part 32)

You have wondered, perhaps, why all real accountants wear hats? They are today's cowboys. As will you be. Riding the American range. Riding herd on the unending torrent of financial data. The eddies, cataracts, arranged variations, fractious minutiae. You order the data, shepherd it, direct its flow, lead it where it's needed ... You deal in facts, gentlemen, for which there has been a market since man first crept from the primeval slurry.

David Foster Wallace

Review of the Accounting Cycle (part I)

by

Charles Lamson

Companies prepare adjusted trial balances after journalizing and posting all adjusting journal entries, which we discussed in parts 29-31. Similar to the unadjusted trial balance, the adjusted trial balance lists all accounts and ending balances, including the accounts created during the adjustment process. Like the unadjusted trial balance, the adjusted trial balance ensures the equality of debits and credits after adjusting journal entries are made but cannot be used to prove the accuracy of the financial information included in the accounts. Note that the accounts included in the adjusted trial balance contain all the data needed to prepare the financial statements.

EXAMPLE 4.10 Adjusted Trial Balance

PROBLEM: Consider Plush Service Corporation from our prior examples in previous posts. Prepare t-accounts that begin with the unadjusted balances from the unadjusted trial balance. Post the adjusting journal entries to the t-accounts and determine the adjusted balances. Prepare an adjusted trial balance at December 31, 2018. 

SOLUTION:

The adjusted trial balance for Plush Service Corporation is presented below.

                     

*GORDON, RAEDY, SANNELLA, 2019, INTERMEDIATE ACCOUNTING, 2ND ED., PP. 113-115*

end