9.2 Recalculating Ledger Balances After Journal Entries

9.2 Recalculating Ledger Balances After Journal Entries

Quick Summary: Once the correcting journals are written, the trial balance cannot simply be re-copied — every account touched by a journal now has a different balance. This section teaches the single skill the redrafting task is built on: take the original balance, apply the journal debits and credits posted to that account, and state the new balance and its column. It is worth up to a quarter of the paper, it is pure arithmetic, and it is the most reliably winnable part of POBC.

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1. Why This Step Exists

Chapter 8 produced journals. A journal, on its own, changes nothing — it is a book of prime entry. The figures only take effect once they are posted to the general ledger accounts, and at that moment the balance on each affected account moves.

The initial trial balance was extracted before those postings. So the redrafted trial balance is not the initial one with a suspense line deleted; it is the initial one with every affected account recalculated. The assessment presents this to you in a very consistent shape:

• You are given the journal entries (or the errors, from which you derive them).
• You are given a short list of balances as they appeared in the initial trial balance.
• You must state, for each account, the new balance and tick debit or credit.

Each line is marked independently. There is no chain of dependency, so a slip on one account costs you that account only.

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2. The Two Directional Rules

Everything here reduces to two rules and a comparison of sizes.

Put plainly: an entry on the same side as the balance builds it up; an entry on the opposite side eats into it.

Worked example A — a straightforward increase

Machinery at cost has an original balance of £24,560 debit. A journal debits Machinery £1,500 (an asset purchase wrongly posted to repairs, now reinstated).

$\text{New balance} = \pounds24{,}560 + \pounds1{,}500 = \pounds26{,}060 \text{ Debit}$

The adjustment is on the same side as the balance, so it adds. Machinery goes into the debit column at £26,060.

Worked example B — an opposite-side reduction

General office expenses have an original balance of £7,150 debit. The correcting journal credits office expenses £1,400 (stationery had been over-debited).

$\text{New balance} = \pounds7{,}150 - \pounds1{,}400 = \pounds5{,}750 \text{ Debit}$

The credit eats into the debit balance but does not exhaust it, so the account stays in the debit column.

Worked example C — a compound account

Some accounts are hit by more than one journal. Purchases opens at £62,000 debit; one journal debits it £8,000 (a daybook total posted short) and another credits it £340 (a stationery invoice wrongly treated as a purchase for resale).

$\text{New balance} = \pounds62{,}000 + \pounds8{,}000 - \pounds340 = \pounds69{,}660 \text{ Debit}$

Net the adjustments first, then apply the total. Working them one at a time is equally valid but doubles the chances of a sign slip.

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3. When a Balance Flips Sides

This is where marks are actually lost. If the opposing adjustment is larger than the original balance, the account changes column entirely — and candidates who have already written "Dr" out of habit do not notice.

Worked example D. Interest received has an original balance of £125 credit. Investigation shows £29 of bank interest was posted to interest received when it belonged to interest paid, and a further £180 credited to the account in error. Both must come out, so the journal debits interest received £209.

$\pounds125 \text{ Cr} - \pounds209 = \pounds84 \text{ Debit}$

The account now has an £84 debit balance. It moves from the credit column to the debit column of the redrafted trial balance.

The discipline that prevents this error: before writing anything, compare the two magnitudes. If the opposing adjustment is bigger than the balance, the column changes. Subtract the smaller from the larger and take the side of the larger figure. This is exactly the balancing-off logic from Section 9.1, applied to one account at a time.

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4. Adjusted and Unadjusted Balances in the Same Trial Balance

The syllabus wording is "complete a trial balance from adjusted and unadjusted balances", and that pairing is deliberate. A typical redrafting task lists ten or twelve accounts, of which perhaps four were touched by journals. The remaining accounts are unadjusted: they carry their original balance into the redrafted trial balance completely unchanged.

Two journals have been posted. Journal 1 records a sales invoice omitted from the daybook: Debit Receivables ledger control £1,200, Credit Sales revenue £1,200. Journal 2 removes bank interest wrongly credited to Interest received: Debit Interest received £209, Credit Bank £209.

Check the adjustments before you go further: debits of £209 + £1,200 = £1,409 and credits of £1,200 + £209 = £1,409. They agree, so no one-sided posting has crept in.

Marks are lost in both directions here. Some candidates "adjust" untouched accounts because they assume every line must move; others forget to carry the untouched accounts into the redrafted totals at all. Neither is a bookkeeping failure — both are reading failures.

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5. Proof Checks Before You Commit

Three quick checks catch nearly every arithmetic slip, and all three fit inside a minute:

1. The suspense account must reach zero. If it does not, one of your recalculations is wrong or an error is uncorrected. See Section 8.3.
2. Total adjustment debits must equal total adjustment credits. Every journal is balanced, so the adjustments as a whole must be balanced too. If they are not, you have mis-posted a side.
3. The redrafted columns must agree. Total the debit column and the credit column of your finished trial balance. Agreement is not proof of correctness — Section 8.1 explains why — but disagreement is certain proof of an error, and it is the fastest signal you have.

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6. Accruals, Prepayments and Depreciation: Where They Actually Sit

Students often arrive at this topic expecting to calculate accruals, prepayments and depreciation, because older materials and the loose phrase "period-end adjustments" suggest it. Be clear about the boundary, because your revision time is finite:

• The POBC scope of content does not include them. The adjustments this unit asks you to make to a trial balance are the journal entries covered in Chapters 6 to 8: opening entries, irrecoverable debts, payroll and, above all, the correction of errors.
• Calculating them is Level 3 work. Accruals, prepayments, the straight-line and reducing-balance depreciation methods and asset disposals belong to Financial Accounting: Preparing Financial Statements.
• What POBC does expect is that such account names do not throw you when they appear in a list of balances. You may well see Accruals, Prepayments, Depreciation charge or Accumulated depreciation among the accounts you must classify, and you need to place each in the right column.

The DEAD CLIC framework from Section 9.1 handles all of these without any knowledge of how the figures were computed — which is exactly the level of understanding POBC is testing. If a task hands you a depreciation figure, treat it as a given number to place, not a calculation to perform.

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7. Putting It Together

A complete redrafting run is therefore mechanical once you trust the two rules:

1. Read the journals and note, account by account, the debits and credits posted to each.
2. For each affected account, net the adjustments and apply them to the original balance using the directional rules.
3. Compare magnitudes and decide the column — checking specifically for any balance that has flipped.
4. Copy the unadjusted accounts across untouched.
5. Confirm suspense is nil, confirm adjustment debits equal adjustment credits, then total both columns.

Section 9.3 runs this process end to end on a full set of balances so you can see all five steps operating together under exam conditions.