To calculate the accounts payable balance using a T-account, you start by setting up the T-account for accounts payable. The left side of the T-account is for debits, while the right side is for credits.
First, record all transactions related to accounts payable. When a company receives goods or services on credit, it will increase the accounts payable balance (a credit entry). Conversely, when the company pays off some of its debts, this will decrease the accounts payable balance (a debit entry).
At the end of the accounting period, you sum up the total credits and total debits. To find the balance of the accounts payable, subtract the total debits from the total credits:
Accounts Payable Balance = Total Credits - Total Debits
The result will give you the accounts payable balance at that point in time. A positive balance indicates the amount still owed by the company.