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Corrected trial balance

Small problem to solve. attachment below.
P2-4A The trial balance of Sterling Company shown below does not balance.
Trial Balance
May 31, 2010
Debit Credit
Cash $5,850
Accounts Receivable $2,750
Prepaid Insurance 700
Equipment 8,000
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
$26,800 $20,050

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
understated $100
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.)


Solution Summary

The solution explains how to prepare a corrected trial balance