Post Closing Trial Balance

Post closing trial balance is just like an adjusted trial balance but the major difference is that it incorporates the effect of closing entries. It means that those temporary accounts which were visible into the adjusted trial balance are no longer visible in the post closing trial balance.

All revenue and expenses accounts which show up in the adjusted trial balance are no longer found in the post closing trial balance. The reason is that we have moved their balances to the income summary account and from income summary account to the retained earning account. The format of the post closing trial balance will be very similar to the adjusted TB. But, it will be very succinct and have very few ledger accounts into it.

Preparation of post closing trail balance is the final stage of any accounting cycle.

Example:

Company XYZ

Post Closing Trial Balance

30 June, 2016

 

Debit

Credit

Cash

81,000

 

Capital

 

100,000

Prepaid Rent (17,000-10,000)

7,000

 

Computer

15,000

 

Accounts Receivable

40,000

 

Raw Material

25,000

 

Accounts Payable

 

25,000

Provision for Depreciation

 

10,000

Water Bill Payable

 

1,000

Interest Payable

 

10,000

Retained Earning

 

22,000

Total

168,000

168,000

 

As you can see that in above trial balance, no temporary ledger accounts of revenue and expenses exist. Reason is that we moved them firstly to the income and summary. After that we also transfer the income and summary balance to the writing a hook for an essay.