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Financial Analysis of Errors

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P4-6A Diane Torres, CPA was retained by Doneright TV Repair Inc. to prepare financial statements for April 2002. Torres accumulated all the ledger balances per Doneright's records and found the following.
DoneRight TV Repair Inc.
Trial Balance April 30, 2002
Debit Credit
Cash $4,000 (debit)
Accounts Receivable 3,200 (debit)
Supplies 800 (debit)
Equipment 10,600 (debit)
Accumulated Depreciation $ 1,350 (credit)
Accounts Payable 2,100 (credit)
Salaries Payable 500 (credit)
Unearned Revenue 890 (credit)
Common Stock 10,000 (credit)
Retained Earnings 2,900 (credit)
Service Revenue 5,450 (credit)
Salaries Expense 3,300(debit)
Advertising Expense 400 (debit)
Miscellaneous Expense 290 (debit)
Depreciation Expense 500 (debit)
$23,190 $23,190
Diane Torres reviewed the records and found the following errors:
1. Cash received from a customer on account was recorded as $950 instead of $590.
2. A payment of $30 for advertising expense was entered as a debit to Miscellaneous Expense $30 and a credit to Cash $30.
3. The first salary payment this month was for $1,900, which included $500 of salaries payable on March 31. The payment was recorded as a debit to Salaries Expense $1,900 and a credit to Cash $1,900. (No reversing entries were made on April 1)
4. The purchase on account of a printer costing $340 was recorded as a debit to Supplies and a credit to Accounts Payable for $340.
5. A cash payment of repair expense on equipment for $86 was recorded as a debit to Equipment $68 and a credit to Cash $68.

(a) Prepare an analysis of each error showing (1) the incorrect entry (2) the correct entry, and (3) the correcting entry.
(b) Prepare a correct trial balance.

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Solution Summary

The solution analyses errors and prepares a correct trial balance

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