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rafapak


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extended trial balance
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Hi guys 

I would like to ask you for help. I have exercise where I should create extended trial balance. Please find enclosed screenshot below. I have some doubts in relation to whether a given item is the item of balance sheet or profit and loss. Please help me to clarify the following issues. 

1. Is Credit card entry reduction to cash account therefore it should be credited to Balance Sheet ?

2. When they have inventory in trial balance, is this opening inventory in present period that was closing inventroy in last period and therefore should be debited to profit and loss because it will be sold in present period ?

3. Is interest received some kind of income so that it should be credited to profit and loss ?

4. Books and journals - i have problem with this entry. Is this regular cost so that it should be debited to profit and loss ? Do they mean books and journals bought for business activities ?

This is all I don't understand from trial balance enclosed. Please , help me in this matter. Regards. Rafal



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Cheshire


Master Book-keeper

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Maybe pop the full question on as well.

Also, have an attempt at filling in the ETB adjustments and see (1) if you balance and (2) then gather opinions.



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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position
rafapak


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Cheshire wrote:

Maybe pop the full question on as well.

Also, have an attempt at filling in the ETB adjustments and see (1) if you balance and (2) then gather opinions.

 thanks for reply. I did extended trial balance on my own and it balances . Still I need to be 100% sure if an item is balance sheet or profit and loss item. What if I did everything correctly by mistake ?



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Onion4Sage


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Hi Rafapak,

If you find this helpful - good. If not, probably best to ignore. It'll either make sense or be more confusing. I hope the former.

There's a fundamental need to understand what debits and credits are that underpins all of this.

Think of the double entry involved in any transaction.
A debit records:

  • an increase in an asset, a decrease in a liability or a decrease in shareholders funds (balance sheet)
  • an expense or a reduction in income (profit and loss)

A credit records:

  • an decrease in an asset, an increase in a liability or an increase in shareholders funds (balance sheet)
  • income or a reduction in an expense (profit and loss)


An example: you pay for £20 of stamps out of petty cash
You've reduced the petty cash balance (asset) and have incurred a postage expense
Expense is Dr Postage (profit and loss) £20
Decrease in asset is Cr Petty Cash (balance sheet) £20

Another example: a customer pays a £500 invoice you sent him two weeks ago
Your bank balance increases and your debtor balance reduces
Increase in bank asset is Dr Bank (balance sheet) £500
Reduction in debtor asset is Cr Debtors (balance sheet) £500

Regards



-- Edited by Onion4Sage on Saturday 11th of January 2020 11:32:37 AM

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Ian

Ian Brown FCA
Onion Reporting Software Ltd

www.onionrs.co.uk

Sage accounts in Excel. No set-up necessary. Free 30 day trial.
Cheshire


Master Book-keeper

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rafapak wrote:
Cheshire wrote:

Maybe pop the full question on as well.

Also, have an attempt at filling in the ETB adjustments and see (1) if you balance and (2) then gather opinions.

 thanks for reply. I did extended trial balance on my own and it balances . Still I need to be 100% sure if an item is balance sheet or profit and loss item. What if I did everything correctly by mistake ?

Please then post the TB you completed, a copy of the original Q (reason being relating to Q4) and your thoughts as to why you undertook each adjustment in line with Ian's very helpful post and bearing in mind the definitions of each of the areas of the SPL and SPF that you have/are looking to adjust.    

Doesnt matter if you get it wrong, but at least that way we can add some useful commentary to better explain if you have got it wrong.  Bearing in mind that this is the busiest time for Accountants (January tax season!!!)

 



__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position
rafapak


Senior Member

Status: Offline
Posts: 396
Date:
Permalink  

thanks for replies guys. I will attach screenshot with finished extended trial balance in a couple of days



-- Edited by rafapak on Wednesday 15th of January 2020 04:26:57 PM

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