Reference no: EM131777873
Problem - The trial balance of the Sterling Company shown below does not balance.
STERLING COMPANY Trial Balance May 31, 2010
|
Cash
|
$ 5,809
|
|
Accounts Receivable
|
|
$2,750
|
Prepaid Insurance
|
678
|
|
Equipment
|
7,613
|
|
Accounts Payable
|
|
4,246
|
Property Taxes Payable
|
520
|
|
M.Sterling, Capital
|
|
12,276
|
Service Revenue
|
6,690
|
|
Salaries Expense
|
4,527
|
|
Advertising Expense
|
|
1,484
|
Property Tax Expense
|
797
|
|
|
$26,634
|
$20,756
|
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 $101.
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 $221 was omitted.
4. A $1,105 cash drawing by the owner was debited to M. Sterling, Capital for $1,105 and credited to Cash for $1,105.
5. A $510 purchase of supplies on account was debited to Equipment for $510 and credited to Cash for $510.
6. A cash payment of $470 for advertising was debited to Advertising Expense for $47 and credited to Cash for $47.
7. A collection from a customer for $197 was debited to Cash for $197 and credited to Accounts Payable for $197.
Instructions - Prepare a correct trial balance. Note that the chart of accounts includes the following: M. Sterling, Drawing, and Supplies.