Question
The following account balances were extracted from the ledger natural balance of Bellview Retailers as at 31 December 2025:
- Cash: $42,000
- Accounts Receivable: $28,000
- Inventory: $55,000
- Prepaid Insurance: $3,000
- Equipment: $120,000
- Accumulated Depreciation: $30,000
- Accounts Payable: $20,000
- Unearned Revenue: $8,000
- Common Stock: $100,000
- Retained Earnings: $67,000
- Sales Revenue: $180,000
- Cost of Goods Sold: $95,000
- Salaries Expense: $42,000
- Rent Expense: $15,000
- Utilities Expense: $5,000
Required: Prepare the trial balance as at 31 December 2025, placing each account in the correct column (debit or credit) with the correct amount. Make sure your trial balance balances.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — offsetting and presentation
A contra account carries the opposite normal balance to the account it reduces and is presented alongside it, not merged into it. The gross amount and the contra both stay on the books so the reader can see the carrying amount and how it was arrived at.
Common mistakes
- Writing the reduction directly against the asset and losing the gross figure.
- Reporting a contra account on the wrong side of the statement, or as a liability rather than a deduction from its asset.
- Treating accumulated depreciation as an expense — it is a cumulative balance, while depreciation expense is the period charge.
Further readingStraight-line depreciation and accumulated depreciation