Errors that result in an unbalanced trial balance are usually the result of a one sided entry in the bookkeeping records or an incorrect addition.

To help identify the reasons why a trial balance may not balance the following steps can be taken.

### 1. Recheck the Unbalanced Trial Balance Column Totals

A trial balance is simply a listing of the debit and credit balances for each account in the accounting ledgers. The debit and credit column totals should be in balance.

As a matter of technique it might be worth adding the columns from the bottom upwards to avoid the same mistake being made twice. Even if the trial balance is still out of balance the process will at least verify that the difference is consistent with previous results.

### 2. Check for the Difference in the Ledger and Trial Balance

The difference calculated above is the amount of the error in the unbalanced trial balance. A quick check through the accounts in the ledger should be made to determine whether a balance has simply been omitted from the trial balance.

In addition check through the trial balance to see whether the amount is included but missed from the column additions.

### 3. Divide the Difference by 2

Take the trial balance difference and divide it by 2. Check the unbalanced trial balance to see whether there is an account balance for this amount.

Account | Debit | Credit |
---|---|---|

Cash | 53 | |

Accounts receivable | 115 | |

Accounts payable | 106 | |

Income | 191 | |

Wages expense | 75 | |

Marketing expense | 54 | |

Total | 222 | 372 |

Difference | 150 |

The difference of 150 is divided by 2 to provide the amount of 75. By looking at the trial balance we can now identify that the wages expense account has a credit balance of 75.

It is normal for expenses to have a debit balance and therefore by checking the wages expense account we can determine whether this balance had been included on the wrong side of the unbalanced trial balance make the appropriate correction.

The corrected trial balance would be presented as follows.

Account | Debit | Credit |
---|---|---|

Cash | 53 | |

Accounts receivable | 115 | |

Accounts payable | 106 | |

Income | 191 | |

Wages expense | 75 | |

Marketing expense | 54 | |

Total | 297 | 297 |

Difference | 0 |

### 4. Divide the Difference by 9

#### Transposition Error

If the difference divided by 9 produces a whole number then it may indicate a transposition error where numbers have been entered in reverse e.g. 19 entered as 91.

Suppose for example a balance of 195 had been entered on the trial balance as 159 with the numbers 5 and 9 transposed.

Unbalanced trial balance error = 195 - 159 = 36 Divided the balance by 9 Amount = 36 / 9 = 4

By dividing the trial balance error in this case 36 by 9 we arrive at a whole number. This indicates a transposition error, the unbalanced trial balance should now be checked against account balances in the ledger to see whether the error can be identified.

#### Is a Number Divisible by 9

Note: When applying this technique that if the digits of a number add up to 9 then the number itself is divisible by 9. For example if the difference was 2,439 we can calculate the following.

Difference = 2,439 Add the digits of the number Amount = 2 + 4 + 3 + 9 = 18 Again add the digits of the number Amount = 1 + 8 = 9

Since the digits of the number add up to 9 then 2,439 must be divisible by 9 (i.e 2,439 / 9 = 271)

#### Slide Errors

A slide error or transplacement error occurs when the decimal point has been entered in the wrong position e.g. 172.34 instead of 1723.40

Suppose a balance of 1,646.70 had been entered on the unbalanced trial balance as 164.67 with the decimal point placed one step to the left.

Unbalanced trial balance error = 1,646.70 - 164.67 = 1,482.03 Divided the balance by 9 Amount = 1,482.03 / 9 = 164.67

By dividing the difference (1,482.03) by 9 the amount of 164.67 is revealed. Check the unbalanced trial balance for this amount or for the same numbers with the decimal point shifted e.g. 1,646.70. Having identified the amount check the balance against the balance in the ledger to make sure there is not a slide error.

### 5. Check the Difference for the Number 3

If the difference contains a 3 it might indicate that a entry error has been made on a numerical key pad. Numerical keypads are arranged in three rows of three columns such that working down a column there is a difference of 3 between rows. For example on a keypad the number 1 is one row below the number 4, a difference of 3; likewise the number 5 is one row below the number 8, again a difference of 3.

If the wrong key was hit in error so that for example 752 was entered as 452 then the unbalanced trial balance difference would be 300. Like wise if the number 486 was entered in error as 456 then the difference is 30 and so on. On each occasion the difference contains a 3 indicating that the wrong key might have been hit in error.

### 6. Is the Difference a Large Amount

If the difference is a large amount compare each account on the unbalanced trial balance with the latest agreed trial balance (usually the opening trial balance). By looking for significant unexplained differences the trial balance error can often be identified.

### 7. Final Steps

If none of the above shortcut techniques locates the difference then the final step is to check methodically through the postings.

- Check the addition of the totals in the special journals.
- Check the posting from the special journals to the general ledger.
- Check that the brought forward opening balances have been correctly entered in the general ledger.
- Check each balance from the general ledger has been transferred to the trial balance correctly.

## About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.