Working trial balance

A working trial balance is a trial balance that is in the process of being adjusted. In concept, it is an unadjusted trial balance, to which you pencil in any adjusting entries needed to close a reporting period (such as for the monthly, quarterly, or annual financial statements). These additional entries are then entered in the general ledger, resulting in a completed trial balance. The working trial balance is useful for testing a complete set of adjusting entries to determine their impact on the financial statements, before actually making the entries in the general ledger.

The steps required to use a working trial balance (assuming the existence of an accounting software package) are:

  1. Print the current version of the ending trial balance, or (better yet) convert the report to an electronic spreadsheet.
  2. Enter all adjusting entries needed to close the month.
  3. Note the descriptions and calculations for each adjusting entry at the bottom of the report.
  4. Carry forward the adjusted account balances to the right side of the report and manually translate them into the income statement and balance sheet.
  5. Revise the adjusting entries as needed, based on the preliminary financial statement results.
  6. Create journal entries for each entry made in the working trial balance, and enter them in the general ledger, along with explanations.
  7. Print the trial balance again, and verify that all entries were made to the correct accounts and in the correct amounts.

The columns used in a working trial balance (in order from left to right) are:

  1. Account number
  2. Account name
  3. Ending debit total
  4. Ending credit total
  5. For manual entries: Blank space for debit entries
  6. For manual entries: Blank space for credit entries
  7. For financial statements: Blank space to enter income statement and balance sheet totals

The working trial balance is part of the documentation required to prepare the financial statements; it is not part of the financial statement reporting package.

It is not possible to construct a balanced working trial balance in a single entry system; the report is designed for use only with a double entry bookkeeping system.

Related Courses

Bookkeeping Guidebook 
Closing the Books 
The Year-End Close