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    Corrected trial balance

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    Small problem to solve. attachment below.
    P2-4A The trial balance of Sterling Company shown below does not balance.
    STERLING COMPANY
    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

    Instructions:
    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.)

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    Solution Summary

    The solution explains how to prepare a corrected trial balance

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