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ACT 201 Chapter 2 (Prepare A Correct Trial Balance - Practice Problem Solution)

The trial balance for Sterling Company as of May 31, 2010, does not balance due to various accounting errors including transposition errors in Accounts Receivable and Service Revenue, omitted postings, and misclassifications. Corrections were made to accounts such as Cash, Accounts Receivable, Equipment, and Advertising Expense, among others. The final corrected trial balance totals $24,930 for both debit and credit sides.

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MD SHAFIN AHMED
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114 views6 pages

ACT 201 Chapter 2 (Prepare A Correct Trial Balance - Practice Problem Solution)

The trial balance for Sterling Company as of May 31, 2010, does not balance due to various accounting errors including transposition errors in Accounts Receivable and Service Revenue, omitted postings, and misclassifications. Corrections were made to accounts such as Cash, Accounts Receivable, Equipment, and Advertising Expense, among others. The final corrected trial balance totals $24,930 for both debit and credit sides.

Uploaded by

MD SHAFIN AHMED
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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The trial balance of the Sterling Company shown below does not balance

STERLING COMPANY
Trial Balance
31st May 2010
Debit
Cash 5850
Accounts Receivable
Prepaid Insurance 700
Equipment 8000
Accounts Payable
Property Taxes Payable 560
M. Sterling, Capital
Service Revenue 6690
Salaries Expense 4200
Advertising Expense
Property Tax Expense 800
26800

Your review of the ledger reveals that each account has a normal balance.You also dis

1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Property T

2. Transposition errors were made in Accounts Receivable and Service Revenue. Based
postings 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

5. A $520 purchase of supplies on account was debited to Equipment for $520 and cre

6. A cash payment of $450 for advertising was debited to Advertising Expense for $45

7. A collection from a customer for $210 was debited to Cash for $210 and credited to

Instructions
Prepare a correct trial balance

Account titles Debit Credit


M Sterling Drawing 1000
Cash 1000

M. Sterling Capital 1000


Cash 1000

M. Sterlinng Drawing 1000


M Sterling Capital 1000

Account titles Debit Credit


Supplies 520
Accounts Payable 520

Equipment 520
Cash 520

Cash 520
Equipment 520

Account titles Debit Credit


Advertising Expense 450
Cash 450

Advertising Expense 45
Cash 45

Advertising Expense 405


Cash 405

Account titles Debit Credit


Cash 210
Accounts receivable 210
Cash 210
Accounts payable 210

Accounts payable 210


Accounts receivable 210
does not balance

Credit

2750

4500

11700

1100

20050

a normal balance.You also discover the following errors

ounts Payable, and Property Tax Expense were each understated $100.

e and Service Revenue. Based on


$6,960, respectively.

. Sterling, Capital for $1,000 and credited to Cash for $1,000.

o Equipment for $520 and credited to Cash for $520.

o Advertising Expense for $45 and credited to Cash for $45.

Cash for $210 and credited to Accounts Payable for $210


STERLING COMPAN
Trial Balance
31st May 2010

Cash (5850+520-405)
Accounts Receivable (2570-210)
Prepaid Insurance (700+100)
Supplies (0+520)
Equipment (8000-520)
Accounts Payable (4500-100+520-210)
Property Taxes Payable
M. Sterling, Capital (11700+1000)
M. Sterling, Drawing(0+1000)
Service Revenue (6960)
Salaries Expense (4200+200)
Advertising Expense (1100+405)
Property Tax Expense (800+100)
STERLING COMPANY
Trial Balance
31st May 2010
Debit Credit
5965
2360
800
520
7480
4710
560
12700
1000
6960
4400
1505
900
24930 24930

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