Small problem to solve. attachment below.
P2-4A The trial balance of Sterling Company shown below does not balance.
May 31, 2010
Accounts Receivable $2,750
Prepaid Insurance 700
Accounts Payable 4,500
Property Taxes Payable 560
M. Sterling, Capital 11,700
Service Revenue 6,690
Salaries Expense 4,200
Advertising Expense 1,100
Property Tax Expense 800
Your review of the ledger reveals that each account has a normal balance. You also discover the following errors:
1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Property Tax Expense were each
2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on posting made, the
correct balances were $2,570 and $6,960 respectively.
3. A debit posting to Salaries Expense of $200 was omitted.
4. A $1,000 cash drawing by the owner was debited to M. Sterling, Capital for $1,000 and
credited to Cash for $1,000
5. A $520 purchase of supplies on account was debited to Equipment for $520 and
credited to Cash for $520
6. A cash payment of $450 for advertising was debited to Advertising Expense for $45 and
and credited to Cash for $45
7. A collection from a customer for $210 was debited to Cash for $210 and credited to
Accounts Payable for $210
Prepare a correct trial balance. Note that the chart of accounts includes the following: M. Sterling, Drawing and Supplies. (Hint: It helps to prepare the correct journal entry for the transaction described and compare it to the mistake made.)
The solution explains how to prepare a corrected trial balance