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    FrozenSpark's Avatar
    FrozenSpark Posts: 5, Reputation: 1
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    #1

    Mar 22, 2007, 03:34 PM
    Post-Closing Trial Balance
    All right, so I have a project that is quite lengthy which involves doing the journal entries, adjusting entries, the work sheets, the trial balances, the balance sheets, and much more Anyway, my question is this: the adjusted trial balance has both debits and credits equal and looks to be correct. However, when I do my post-closing trial balance I need to add the retained earning which I found out in the closing entries part of the project. When I add the retained earnings, though, the credits outweigh the debit and there is no longer a balance. (The difference obviously is the retained earnings) Is it suppose to be like this? Or am I doing something wrong?
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Mar 22, 2007, 09:05 PM
    You are fine once you finish the adjusted trial balance.

    Now it is time for closing entries…you aren't so sure and your post closing trial balance you are confused over.

    Take all your Revenue accounts, debit them, and credit them to Retained Earnings (therefore, debits equal credits).

    Also, take all your Expense accounts, credit them, and debit them to Retained Earnings (once again, debits equal credits)

    At the end of the day, your post closing trial balance will have assets, liabilities, retained earnings and any other equity accounts.

    Remember, Assets = Liabilities + Shareholder's Equity.

    Shareholder's Equity consists of Retained Earnings, Donated Capital, etc.
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