subject: Post Closing Trial Balance: Simplified [print this page] Having some issues with you Post Closing Trial Balance? Don't worry! It's not nearly as complicated as it seems.
When the closing entries are journalized and posted to the ledger, only balance sheet accounts remain open because they are permanent accounts. The whole point of preparing a post-closing trial balance is to check the overall accuracy of the closing entries and to show that all your debits and credits remain in balance and the next accounting period may begin accurately.
Before you can get started, you will need your balance sheet and statement of owner's equity at the ready. You will be pulling account titles and account balances from both of them and compiling them neatly into the post closing trial balance to ensure the accounting cycle has been completed accurately and can begin again once more.
First you will need to make your three-line title (Company Name, Post Closing Trial Balance, Date) as you have done on all of your other financial statements. This will show what company the statement was prepared for, what statement it actually is, and the date the information corresponds to.
Next, you will need to prepare an "Account" column for your remaining Account Titles at the close of the period, a Debit column for all assets, and a Credit column for all Contra-Assets and liabilities.
Under your "Account" column begin by filling in your Asset accounts (Cash, Accounts Receivable, Supplies, Rent, Equipment, etc.) with the corresponding Debit balances found on the Balance Sheet. You will need to look out for Contra-Assets (Accumulated Depreciation, etc.). Don't let these cause any confusion! They are still assets to the company they just have a Credit balance instead of a Debit Balance. Continue by listing your Liability accounts (Accounts Payable, Salaries Payable, Unearned Fees, etc.) with the corresponding Credit balances, also found on the Balance Sheet.
Finally, locate your Owner's Capital account at the bottom of your Statement of Owner's Equity. Under your "Account" column you will need to put your Owner's Capital account. Remember, this should have a Credit balance also found at the very bottom of your Statement of OE. If you recall, this was calculated by taking capital from the beginning of the accounting period, adding income for that period, and subtracting withdrawals made by the owner during the period.
After this has been done, you will be able to take the total amounts for your debit and credit columns. If you have been using Microsoft Excel, this can be done easily and accurately by highlighting all the numbers in the column and hitting the "summation" key. This should, if done correctly, place the total amount in the cell directly below the rest of the amounts in the column. You will have to do this twice, once for the debit column, and once again for the credit column.
When all is said and done, your total Debits should equal your total Credits at the bottom of the Post Closing Trial Balance. If this is not the case, an error has been made somewhere in the Accounting Cycle and you will need to go back and look for what may be throwing it off ($200 instead of $2000 in a certaincell, an intended debit journalized as a credit, etc.). If your Debits and Credits ARE equal, you have completed the Accounting Cycle correctly and you are finished. Your financial statements are in order and your closing entries seem to be accurate as well. Because your debits and credits are the same, the accounting equation remains in balance and the accounting cycle can begin again accurately for the new accounting period.
