How to Prepare a Post-Closing Trial Balance


The post-closing trial balance is the last step in closing the accounting books for a company. The trial balance closing process is often done on a columnar paper or a spreadsheet with debits, credits and resulting balances separated in different columns. If total debits don't equal total credits, you need to identify and correct the mistakes -- accountants usually don't close the books when the trial balance indicates that at least one error has occurred in the process.

Obtain an adjusted trial balance -- that's your starting point. It's a listing of all accounts with descriptions and balances after all adjusting entries, such as depreciation and accruals, have been done. Be sure that you have one line per account and enough columns to the right for closing entries and the resulting balances. To make sure you have the latest adjusted trial balance, compare its numbers to the ones on the latest financial statements -- the amounts should match.

Process closing entries. The goals of these entries are to move the income or loss to owner's equity, and to start a new period with a clean slate. Closing entries also close the owner withdrawal account. These entries are booked in the accounting records and in the trial balance worksheet. Closing entries' debits and credits should total to the same amount in the spreadsheet. If you have $100 as total debits, you should have $100 as total credits.

Calculate the post-closing trial balance. The calculation is done across and vertically. If an account is classified as a debit, and the next column contains a debit number, they should be added up; if it contains a credit, then the credit should decrease the debit account balance. The vertical calculations involve adding up the columns in the worksheet and making sure that debits equal credits. The post-closing trial balance should also follow the accounting equation vertically with asset account balances equaling liabilities plus equity accounts.

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