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Worked-example setupScope and assumptions
- Northline Studio is a sole proprietorship that opens with $15,000 Cash and a $15,000 balance in Owner, Capital; every other listed account opens at zero.
- The supplies remain unused, the customer service is fully performed, and the utility service is consumed when paid.
- Each journal line posts once to the named account with a stable entry reference.
- Period
- One reporting period before adjustments and closing
- Units
- USD
- Rounding
- Whole US dollars; no rounding required
Problem
Northline Studio is a small design firm that begins the period with $15,000 Cash and $15,000 in Owner, Capital. Post the 5 entries below to the general ledger, compute the ending account balances, and prepare an unadjusted trial balance. Explain what the equality check does and does not show.
Where each journal-entry line is posted
| Entry | Debit posting | Credit posting |
|---|---|---|
| JE-01 Supplies delivered | Supplies $5,000 | Accounts Payable $5,000 |
| JE-02 Supplier paid | Accounts Payable $2,000 | Cash $2,000 |
| JE-03 Service on credit | Accounts Receivable $6,000 | Service Revenue $6,000 |
| JE-04 Receivable collected | Cash $1,500 | Accounts Receivable $1,500 |
| JE-05 Utilities paid | Utilities Expense $1,000 | Cash $1,000 |
The table has ten posted lines but only five transactions and five entries.
Each line belongs to one account history and retains its JE reference.
Account rollforwards
Cash
$15,000 opening + $1,500 debits − $3,000 credits = $13,500
Accounts Receivable
$0 opening + $6,000 debits − $1,500 credits = $4,500
Accounts Payable
$0 opening + $5,000 credits − $2,000 debits = $3,000 credit
Supplies ends at a $5,000 debit, Service Revenue at a $6,000 credit, and Utilities Expense at a $1,000 debit.
Unadjusted trial balance
| Account | Debit | Credit |
|---|---|---|
| Cash | $13,500 | — |
| Supplies | $5,000 | — |
| Accounts Receivable | $4,500 | — |
| Utilities Expense | $1,000 | — |
| Accounts Payable | — | $3,000 |
| Owner, Capital | — | $15,000 |
| Service Revenue | — | $6,000 |
| Total | $24,000 | $24,000 |
Northline's trial balance is unadjusted. Northline has not yet recorded its period-end adjusting entries or closed its temporary accounts.
Two balanced errors
If JE-03 were omitted in full, Accounts Receivable and Service Revenue would both be $6,000 lower; total debits and credits would remain equal. If Supplies were debited instead of Utilities Expense in JE-05, the same $1,000 debit and Cash credit would also balance while overstating assets and understating expense.
The first error requires a check for a missing transaction or a transaction recorded in the wrong period. The second requires a check of the account choice against the purchase evidence. Equal columns do not reveal either error.
Interpretation
The $4,500 Accounts Receivable balance is the amount customers still owe for completed services. The $3,000 Accounts Payable balance is the amount Northline still owes its supplier. The ledger shows the transactions that produced each balance. Equal trial-balance totals do not.
Common wrong paths
- Count ten postings as ten transactions: Each of five balanced entries supplies two linked account lines.
- Use credit activity as the payable balance: The $5,000 credit is reduced by the $2,000 debit settlement.
- Call the trial balance final: It is an unadjusted checkpoint in this fact pattern.
- Treat equality as proof that the records are correct: A missing entry or an amount in the wrong account can leave the totals equal.
Verified calculation · journal entry
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- accounts
- 7 fields
Inspect data
{
"accounts_payable": {
"classification": "liability",
"opening": 0
},
"accounts_receivable": {
"classification": "asset",
"opening": 0
},
"cash": {
"classification": "asset",
"opening": 15000
},
"owners_equity": {
"classification": "equity",
"opening": 15000
},
"service_revenue": {
"classification": "revenue",
"opening": 0
},
"supplies": {
"classification": "asset",
"opening": 0
},
"utilities_expense": {
"classification": "expense",
"opening": 0
}
}- entries
- 5 items
Inspect data
[
{
"label": "supplies delivered on credit",
"lines": [
{
"account": "supplies",
"credit": null,
"debit": 5000
},
{
"account": "accounts_payable",
"credit": 5000,
"debit": null
}
]
},
{
"label": "partial supplier payment",
"lines": [
{
"account": "accounts_payable",
"credit": null,
"debit": 2000
},
{
"account": "cash",
"credit": 2000,
"debit": null
}
]
},
{
"label": "service performed on credit",
"lines": [
{
"account": "accounts_receivable",
"credit": null,
"debit": 6000
},
{
"account": "service_revenue",
"credit": 6000,
"debit": null
}
]
},
{
"label": "partial receivable collection",
"lines": [
{
"account": "cash",
"credit": null,
"debit": 1500
},
{
"account": "accounts_receivable",
"credit": 1500,
"debit": null
}
]
},
{
"label": "current utilities paid",
"lines": [
{
"account": "utilities_expense",
"credit": null,
"debit": 1000
},
{
"account": "cash",
"credit": 1000,
"debit": null
}
]
}
]Recomputed result
| Measure | Value |
|---|---|
| accounts payable | 3,000 |
| accounts receivable | 4,500 |
| cash | 13,500 |
| ending credit balances | 24,000 |
| ending debit balances | 24,000 |
| owners equity | 15,000 |
| service revenue | 6,000 |
| supplies | 5,000 |
| total credits | 15,500 |
| total debits | 15,500 |
| trial balance difference | 0 |
| utilities expense | 1,000 |