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.