Preparation of Trial Balance Under the NGAS

Trial Balance

A Trial Balance is a list showing the equality of debit and credit balances of all general ledger accounts as of a given period.

Purposes of the Trial Balance

To prove the mathematical equality of the debits and credits after posting;
To uncover errors in journalizing and posting; and

To serve as basis for the preparation of the financial statements.

The Trial Balance Preparation Under the NGAS

Procedures:
1. Complete the heading; 2. From the General Ledger, list the accounts with balances as of the Trial Balance date (Unadjusted TB);

3. Show the total of the debit and credit columns; 4. Prepare the adjusting entries and post to the appropriate column in the worksheet and the General Ledger; 5. Compute for the adjusted balances of the accounts and extend the same under the Pre-Closing TB column; 6. Prepare Closing Entries and post to the worksheet and the General Ledger; 7. Prepare the Post-Closing Balances of the accounts; and 8. Sign the certification.

Department ABC Trial Balance (RA Books) (Unadjusted) As of December 31, 2011

Account Title Cash-Natl.Treasury, MDS Advances to Officers and Employees Other Receivables Office Supplies Inventory Construction Matrls. Invty. Prepaid Rent Prepaid Insurance Prepaid Interest Office Equipment Accounts Payable Due to GSIS Government Equity Subsidy Income from NG Electricity
Salaries & Wages-Reg.Pay

Code 108 148 149 155 168 177 178 179 221 401 413 501 651 767 701

Debit 11,900 800 1,000 500 300 1,200 600 2,400 10,000

Credit

10,000 700 1,600 40,000 3,600 20,000 52,300

Total

52,300

Certified Correct:

Chief Accountant

Worksheet The Work Sheet, has been defined as a columnar sheet of paper on which accountants have summarized information needed to prepare the adjusting and closing entries and to prepare the financial statements. It is also a useful tool for the auditor in his/her analysis and examination of the accounts. The preparation of worksheet is optional with the following suggested format:
Adjusted/ PreClosing Trial Balance Statement of Income and Expenses PostClosing Trial Balance

Accounts

Unadjusted Trial Balance

Adjustme nts

Closing Entries

Balance Sheet

Title

Code

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Adjusting Journal Entries

Under the matching principle, adjustments should be made for economic activities that have taken place but are not yet recorded at the time when the financial statements are prepared. There are of two main types: accrued items and deferred items.

Adjustments for Accrued Items:

An accrued item is an adjusting entry for an economic activity already undertaken but not yet recorded into an asset and revenue accounts or a liability and expense.

Adjustments for Deferred Items:

A deferred item is an adjusting entry transferring data previously recorded in an asset account to an expense account, or data previously recorded in a liability account to a revenue account.

Adjusting Entries
1. Depreciation - Office Eqp't 921 Accum. Depn - Offce Eqp't 321 To take up depreciation for the period

Dr.
900

Cr.
900 100 100

2. Bad Debts Expense 901 Allow. for Doubtful Accounts 301 To provide allowance for Doubtful accounts

3. Rent Expenses 782 1200 Prepaid Rent 177 To record the expired portion of prepaid rent 4. Insurance Expenses 893 150 Prepaid Insurance 178 To record expired portion of prepaid insurance

1200

150

Dr.
5. Interest Expenses 975 600 Prepaid Interest 179 To record expired portion of prepaid interest

Cr.
600

6. Office Supplies Expenses 755 300 Office Supplies Invty. 155 300 To record issuance of office supplies per Report of Supplies and Materials Issued.

7. Repairs & Maint. -Office Bldgs. 811 200 Construction Materials Invty. 168 To record issuance of construction materials. 8. Traveling Expenses-Local 751 300 Due from Officers & Empl. 123 To take up liquidation of travelling allowance

200

300

9. Prior Years' Adjustments 684 300 Due from Officers & Empl. 123 300 To take up liquidations of prior year's advance for TEV.

Adjusting Journal Entries:

A. Reversion of unutilized NCA at the end of the year (No check to issued, only JEV) Subsidy Income from NG 651 xx Cash- Natl. Treasury- MDS 108 xx B. Restoration of cash pertaining to unreleased checks at the end of the year (Prepare JEV on the last working day of Dec.) Cash - Natl. Treasury, MDS 108 xx Cash in Bank, LCCA 111 xx Accounts Payable 401 xx Due to GSIS 413 xx

Adjusting Entries cont.. Dr.

10. Cash - Natl. Treas, MDS 108 1,200 Accounts Payable or 401 Due to Officers and Employees To restore the cash equivalent to the total amount of unreleased checks as of Dec. 31, 2002.

Cr.
1,200

11. Subsidy Income from NG 651 Cash - Natl. Treas., MDS 108 To take up reversion of unused NCA.

11,900 11,900

Department of ABC Trial Balance (RA Books) As of December 31, 2006

Account Title Acct. Code 108 148 149 155 168 177 178 179 221 301 321 401 413 501 512 684 513 651 701 751 767 782 893 755 811 921 901 975 20,000 40,000 Unadjusted TB Debit Credit 11,900 800 1,000 500 300 1,200 600 2,400 10,000

Adjusting Entries Debit Credit 1,200 11,900 600 300 200 1,200 150 600 100 900 1,200

Cash-NT, MDS Advances toOfficers & Employees Other Receivables Office Supplies Inventory Construction Materials Invty. Prepaid Rent Prepaid Insurance Prepaid Interest Office Equipment Allowance for Doubtful Accounts Accumulated Depr.-OE Accounts Payable Due to GSIS Government Equity Income and Expense Summary Prior Years Adjustments Retained Operating Surplus Subsidy Income from NG Salaries & Wages - Regular Pay Travelling Expenses-Local Electricity Rent Expense Insurance Expenses Office Supplies Expenses Repairs & Maint. -Office Bldgs. Depreciation - Office Equipment Bad Debts Expense Interest Expenses

10,000 700 1,600

300 11,900 300

3,600

52,300

52,300

1,200 150 300 200 900 100 600 17,150

17,150

Department of ABC Trial Balance (RA Books) As of December 31, 2006

Account Title Acct. Code 108 148 149 155 168 177 178 179 221 301 321 401 413 501 512 684 513 651 701 751 767 782 893 755 811 921 901 975 20,000 300 3,600 1,200 150 300 200 900 100 600 17,150 40,000 11,900
20,000 300 3,600 1,200 150 300 200 900 100 600 42,600 28,100

Unadjusted TB Debit Credit 11,900 800 1,000 500 300 1,200 600 2,400 10,000

Adjusting Entries Debit Credit 1,200 11,900 600 300 200 1,200 150 600 100 900 1,200

Pre-Closing Debit Credit 1,200 200 1,000 200 100 450 1,800 10,000 100 900 11,200 700 1,600 300

Cash-NT, MDS Advances toOfficers & Employees Other Receivables Office Supplies Inventory Construction Materials Invty. Prepaid Rent Prepaid Insurance Prepaid Interest Office Equipment Allowance for Doubtful Accounts Accumulated Depr.-OE Accounts Payable Due to GSIS Government Equity Income and Expense Summary Prior Years Adjustments Retained Operating Surplus Subsidy Income from NG Salaries & Wages - Regular Pay Travelling Expenses-Local Electricity Rent Expense Insurance Expenses Office Supplies Expenses Repairs & Maint. - Office Buildings Depreciation - Office Equipment Bad Debts Expense Interest Expenses

10,000 700 1,600 300

52,300

52,300

17,150

42,600

Closing Journal Entries

Closing journal entries are general journal entries which close out the balances of all nominal and intermediate accounts at the end of the accounting period. Nominal accounts i.e. income and expenses shall be closed to the Income and Expense Summary account and the balance shall be closed to the Retained Operating Surplus at the end of the accounting period. The balance of the Retained Operating Surplus account shall be closed to the Government Equity account at the close of the accounting period.

National Treasury-MDS / Subsidy Income from NG) shall be adjusted prior to the closing of the accounts at year-end because of the DBM policy that the NCA will only be valid within the year of issue or as indicated on the NCA.

Under the NGAS, any unutilized NCA (Cash,

There is no need to issue an MDS check for remittance to BTr.

Total NCA received Total MDS Checks issued Balance, December 31, 2004

P10,000 9,800 P 200

Adjusting Journal Entry: Subsidy Income from NG 651 200 Cash-Natl. Treas., MDS 108 200

1. Income and Expense Summary

512 27,350 Salaries & Wages-Regular Pay 701 20,000 Traveling Expenses-Local 751 300 Electricity 767 3,600 Rent Expenses 782 1,200 Insurance Expenses 893 150 Office Supplies Expenses 755 300 Repairs and Maint. - Office Bldg. 811 200 Depreciation - Office Equip. 921 900 Bad Debts Expense 901 100 Interest Expenses 975 600 To close the balance of expense accounts to Income and Expense Summary
28,100

2.

Subsidy Income from NG 651 28,100 Income and Expense Summary 512 To close the balance of Subsidy Income from NG to Income and Expense Summary

3.

Income and Expense Summary

512 750 Retained Operating Surplus 513 To close the balance of Income and Expense Summary to Retained Operating Surplus.

750

Retained Operating Surplus 513 300 Prior Years' Adjustments 684 300 To close Prior Years Adjustment to Retained Operating Surplus

5.

Retained Operating Surplus 513 450 Government Equity 501 To close the balance of Retained Operating Surplus to Government Equity.

450

Department ABC Trial Balance (RA Books) As of December 31, 2011

Account Title Acct. Code 108 148 149 155 168 177 178 179 221 301 321 401 413 501 512 684 513 651 701 751 767 782 893 755 811 921 901 975 20,000 300 3,600 1,200 150 300 200 900 100 600 17,150 40,000 11,900 20,000 300 3,600 1,200 150 300 200 900 100 600 42,600 28,100 Unadjusted TB Debit Credit 11,900 800 1,000 500 300 1,200 600 2,400 10,000 Adjusting Entries Debit Credit 1,200 11,900 600 300 200 1,200 150 600 100 900 1,200 Pre-Closing Debit Credit 1,200 200 1,000 200 100 450 1,800 10,000 100 900 11,200 700 1,600
28,100 Closing Entries Debit Credit

Cash-NT, MDS Advances to Officers & Employees Other Receivables Office Supplies Inventory Construction Materials Invty. Prepaid Rent Prepaid Insurance Prepaid Interest Office Equipment Allowance for Doubtful Accounts Accumulated Depr.-OE Accounts Payable Due to GSIS Government Equity Income and Expense Summary Prior Years Adjustments Retained Operating Surplus Subsidy Income from NG Salaries & Wages - Regular Pay Travelling Expenses-Local Electricity Rent Expense Insurance Expenses Office Supplies Expenses Repairs and Maint. - Office Bldg. Depreciation - Office Equipment Bad Debts Expense Interest Expenses

10,000 700 1,600 300

450 28,100 300 750 20,000 300 3,600 1,200 150 300 200 900 100 600 56,950

300
750 28,100

52,300

52,300

17,150

42,600

56,950

Department ABC Trial Balance (RA Books) As of December 31, 2011

Account Title Cash-NT, MDS Advances to Officers & Employees Other Receivables Office Supplies Inventory Construction Materials Invty. Prepaid Rent Prepaid Insurance Prepaid Interest Office Equipment Allowance for Doubtful Accounts Accumulated Depr.-OE Accounts Payable Due to GSIS Government Equity Income and Expense Summary Prior Years Adjustments Retained Operating Surplus Subsidy Income from NG Salaries & Wages - Regular Pay Travelling Expenses-Local Electricity Rent Expense Insurance Expenses Office Supplies Expenses Repairs and Maint. -Office Bldg. Depreciation - Office Equipment Bad Debts Expense Acct. Code 108 148 149 155 168 177 178 179 221 301 321 401 413 501 512 684 513 651 701 751 767 782 893 755 811 921 901 20,000 300 3,600 1,200 150 300 200 900 100 40,000 11,900 20,000 300 3,600 1,200 150 300 200 900 100 28,100 Unadjusted TB Debit Credit 11,900 800 1,000 500 300 1,200 600 2,400 10,000 Adjusting Entries Debit Credit 1,200 11,900 600 300 200 1,200 150 600 100 900 1,200 Pre-Closing Debit Credit 1,200 200 1,000 200 100 450 1,800 10,000 100 900 11,200 700 1,600 28,100 300 300 750 28,100 20,000 300 3,600 1,200 150 300 200 900 100 Closing Entries Debit Credit

10,000 700 1,600

450 28,100 300 750

The Trial Balance Preparation Under the NGAS

Unadjusted TB Adjusting Entries
Adjusted/ Pre-Closing TB

Closing Entries

Post Closing TB

Generation of Financial Statements