The adjusted trial balance¶
You've now recorded all four kinds of adjusting entries: prepaids, deferred revenue, accrued expenses, and accrued revenues. On their own, those entries just sit in a journal. Before they change a single number anyone sees, you have to post them to the ledger and rebuild the trial balance. That rebuilt trial balance, the adjusted trial balance, is the direct input to every financial statement in the next section, so an error here shows up everywhere downstream.
Posting adjustments to the ledger¶
Posting an adjusting entry works exactly like posting any other entry: each debit and credit lands in its account's ledger, and that account's running balance moves accordingly. Accounts an adjustment doesn't name keep their unadjusted balance. At Harbor Music Lessons, the ledger shows Supplies at $450 before adjustment. Posting a $250 credit to Supplies drops it to $200, while Common Stock, which no adjustment touches, stays at $14,600.
Building the adjusted trial balance¶
Once every adjustment is posted, rebuild the trial balance the way you built the unadjusted one: list each account in statement order, in the column matching its normal balance. The version below adds two columns in between: the unadjusted balance, the adjustment, and the adjusted balance. In the adjustment column, an increase to an account's own normal balance is a positive number and a decrease is negative. Supplies is debit-normal, so a decrease is negative; Service Revenue is credit-normal, so an increase is positive.
| Account | Unadjusted | Adjustment | Adjusted |
|---|---|---|---|
| Supplies | $450 | -$250 | $200 |
| Deferred Revenue | $700 | -$350 | $350 |
| Service Revenue | $3,250 | +$350 | $3,600 |
Every adjustment problem also tells you when the books were last adjusted, and that date matters. Harbor last recorded adjusting entries at the end of February, so nothing dated March 1 or later, the new equipment, this month's lease, the unpaid salaries, has been touched yet. Counting from whichever start date a fact gives you through the end of the current period tells you how many months to adjust for.
What the totals do and don't prove¶
Add the adjusted column the same way you added the unadjusted one: debit-normal accounts on one side, credit-normal on the other. At Harbor, both sides land on $21,890. That equality proves the same narrow thing an unadjusted trial balance proves: total debits equal total credits somewhere in the books. It does not prove the four adjustments above are the right ones. An adjustment sent to the wrong account, or booked for the wrong amount on both sides, can still leave debits equal to credits while the underlying balances are wrong.
Common mistake: assuming an adjustment changes Cash
Cash is the one account no adjusting entry ever touches. Cash was already recorded the moment it changed hands; adjustments only move revenues and expenses into the right period. At Harbor, Cash is $15,450 unadjusted and $15,450 adjusted, untouched by any of the four entries above. If your adjustment debits or credits Cash, you've written a transaction entry, not an adjusting entry.
Pause and work¶
Fill in an unadjusted trial balance's Adjustment and Adjusted columns using the facts given, and check that both totals still match.
With every account's adjusted balance in hand, you're ready to turn this list into the income statement, the statement of stockholders' equity, and the balance sheet, which is exactly what the next section does.