The trial balance of the Sterling Company shown below does not balance.
|
STERLING COMPANY |
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|
Debit |
Credit |
|
|
Cash |
$5,850 |
|
|
Accounts Receivable |
$2,750 |
|
|
Prepaid Insurance |
700 |
|
|
Equipment |
8,000 |
|
|
Accounts Payable |
4,500 |
|
|
Property Taxes Payable |
||
|
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 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 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 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.)