Question
Hollybrook Dental keeps its Accounts Receivable account in running-balance format. On May 1, 2025 the account had an opening balance of $3,200 (debit). The following events affected patient accounts during May.
| Date | Event |
|---|
| May 6 | Billed patients $2,900 for services performed. |
| May 13 | Received $2,400 in payments from patients on account. |
| May 21 | Billed patients $1,700 for services performed. |
| May 28 | Received $1,900 in payments from patients on account. |
Required: Using the Running Balance format, post the opening balance (Balance b/d) and the four May events to the Accounts Receivable account, keeping the running balance correct after each posting, then balance the account off on May 31, 2025 (Balance c/d). Name each posting after the other account involved.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — Presentation of Financial Statements
Work the cycle in its fixed order: journalise, post to the ledger, extract an unadjusted trial balance, pass adjusting entries, extract an adjusted trial balance, prepare the statements, then close the temporary accounts. Each step consumes the output of the one before it, so an error early on propagates all the way to the closing entries rather than staying local.
Common mistakes
- Preparing the financial statements from the unadjusted trial balance instead of the adjusted one.
- Closing permanent accounts — assets, liabilities and capital carry forward; only revenue, expense and drawings/dividends close.
- Forgetting that the post-closing trial balance should contain no income statement accounts at all.
Further readingIAS 1: what goes where in a full set of statements