Trial Balance June 30, 2017 Debit Credit $1,990 $3,151 1,300 5,300 Accounts Rece

Question

Trial Balance June 30, 2017 Debit Credit $1,990 $3,151 1,300 5,300 Accounts Receivable. Accounts Payable Uneamed Service Revenue .e $ 2,566 5,000 3,000 1,200 Dividends Retained Earnings... 575 2,380 Salaries and Wages Expense. Office Expense. 3,410 840 $15,776 $14,936 Each of the listed accounts should have a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors. 1. Cash received from a customer on account was debited for $500, and Accounts Receivable was credited for the same amount. The actual collection was for $600. 2. The purchase of a computer printer on account was for $1,000 was recorded as a debit to Supplies for $1,000 and a credit to Accounts Payable for $1,000. 3. Services were performed on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89. 4. A payment of $85 for telephone charges was recorded as a debit to Office Expense for $85 and a debit to Cash for $85. 5. When the Unearned Service Revenue account was reviewed, it was found that service revenue amounting to $325 was performed prior to June 30 (related to Unearned Service Revenue 6. A debit posting to Salaries and Wages Expense of $760 was omitted. 7. A payment on account for $206 was credited to Cash for $206 and credit to Accounts Payable for $260. 8. A dividend was debited to Salaries and Wages Expense for $675 and credited to Cash for $675

Explanation / Answer

First, we have to make the revised trial balance with normal balance. Revised Trial Balance Debit Credit Cash 1990 Accounts receivable 3151 Supplies 1300 Equipment 5300 Accounts Payable 2566 Unearned Service Revenue 1200 Common Stock 5000 Dividends 575 Retained earnings 3000 Service revenue 2380 Salaries & Wages expense 3410 Office expense 840 Totals 16566 14146 2420 Now we have to made corrections of the errors as pointed out below: 1. Actual collection was $600 and recorded for $500. Hence the difference of $100 should be adjusted in Cash account and Accounts receivable account. 2. Computer printer should be debited to Equipment and not to Supplies account. Hence correction should be made in Equipment (Debit) and Supplies (Credit) account. 3. Services performed for $890, which has been correctly debited to Accounts receivable account. However, Service revenue has been credited with $89 only, hence the difference $801 (890-89), should be credited to service revenue. 4. Payment of telephone charges is correctly debited to Office expenses. However, this should be credited to Cash account, instead of debit. Hence cash account should be corrected with double amount of $170 (85 x 2). 5. An adjustment entry is required to transfer $325 from Unearned service revenue to Service revenue account.   6. Debit posting to salaries and wages expense omitted, now to be corrected by debit to Salaries and wages account. 7. Payment to Accounts payable is correctly credited to cash, but wrongly credited to Accounts payable. This should be debited to Accounts payable account with $466 (206+260). 8. Dividend paid should be debited to Dividend account and not to Salaries and wages account. Hence this should be debited to dividend to Dividend account and credited to Salaries and wages account. The revised Trial balance is prepared as below: Final Trial Balance Debit Credit Cash 1920 Accounts receivable 3051 Supplies 300 Equipment 6300 Accounts Payable 2100 Unearned Service Revenue 875 Common Stock 5000 Dividends 1250 Retained earnings 3000 Service revenue 3506 Salaries & Wages expense 3495 Office expense 840 Totals 17156 14481 2675 However, the trial balance is still not tallied, and there is still some errors left in recording / postings.

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