Extended Trial Balance

Shortbread64

I am getting a bit confused with the depreciation figure in the extended trial balance. I know that it is a CR on the ledger and then a CR on the adjustments. Then it is totalled in the CR on the balance sheet. So far the adjustment figure and the balance sheet balances.
But then I am a bit confused as to the figure in the P & L. I know it is a DR. Say the ledger is £900 and the adjustment is £675 then the balance sheet shows £1575 as a CR. If I put the £675 in the P & L as a DR then I find the P & L is out by £675 on the CR side. So does this £675 go on as a CR also? If so what does it go down as?

numberjunky

I can't quite see what you are doing but Dep'n works like this

Dep'n will be a Debit on P&L
Acc Dep'n will be Credit on Balance sheet (to reduce fixed assets at cost)

So let's say figures as per trial balance are

Vehicles 50000 (Dr)
Accumulated Dep'n 15000 (Cr)



You are then asked to calculate Dep'n for the year on 10% straight line
Make entries on ETB adjustments -
(this is the important double entry)
This gives Depreciation A/C 5000 DEBIT
and Acc Depreciation A/C 5000 CREDIT

Then carry balances across giving
P&L account - Dep'n 5000
Balance Sheet - Acc Dep'n 20000

And that's really it.
Good luck and I'm sure there will be more posts.

karenv

Are you meaning that the P&L becomes out of balance?

Could this be because you have increased the figure for depreciation therefore the figure you are using, in the p&l on the ETB, for profit is too high.
Thinking about it depreciation for the year reduces the amount of profit for the year.

Shortbread64

Thanks. I have got it now. It was the 'important double entry' that I was not doing. I have now got it to balance and understand now.

numberjunky

Happy to have helped.

It seemed odd that you didn't mention the Acc. Dep'n Acc

Glad it's all clear now.