Transaction Entry
To begin with, let’s assume Sameera General has the following transaction to record:
- Purchased goods worth $5,000 on credit.
The journal entry for this transaction would be:
- Debit: Purchases Account $5,000
- Credit: Accounts Payable $5,000
This entry reflects an increase in purchases and a corresponding liability.
Post to Ledger
1. Purchases Account
- Debit: $5,000
- Credit: $0
- Balance: $5,000 (Debit)
2. Accounts Payable Account
- Debit: $0
- Credit: $5,000
- Balance: $5,000 (Credit)
Prepare Trial Balance
In preparing the trial balance, we list all ledger accounts along with their balances:
| Account Name | Debit ($) | Credit ($) |
|-----------------------|-----------|------------|
| Purchases Account | 5,000 | |
| Accounts Payable | | 5,000 |
| Total | 5,000 | 5,000 |
Explanation of the Trial Balance
- The trial balance serves as a summary of all account balances, ensuring that total debits equal total credits.
- In our case, both sides balance at $5,000, confirming the accuracy of our postings.
- This process helps in identifying any discrepancies before preparing the final financial statements.
By following these steps, Sameera General can ensure accurate financial reporting and maintain effective bookkeeping practices.