Trial balance of lagerstrom company

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Reference no: EM13532937

This trial balance of Lagerstrom Company does not balance.

LAGERSTROM COMPANY 
Trial Balance 
May 31, 2012


Debit

Credit

Cash

$6,340


Accounts Receivable


$2,750

Prepaid Insurance

700


Equipment

8,000


Accounts Payable


4100

Income Taxes Payable

850


Common Stock


5,700

Retained Earnings


6,000

Service Revenue

7,690


Salaries and Wages Expense

4,200


Advertising Expense


1100

Income Tax Expense

900



$28,680

$19,650

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 Income 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 $7,960, respectively.

3. A debit posting to Salaries and Wages Expense of $500 was omitted.

4. A $600 cash dividend was debited to Common Stock for $600 and credited to Cash for $600.

5. A $350 purchase of supplies on account was debited to Equipment for $350 and credited to Cash for $350.

6. A cash payment of $490 for advertising was debited to Advertising Expense for $49 and credited to Cash for $49.

7. A collection from a customer for $240 was debited to Cash for $240 and credited to Accounts Payable for $240.

Instructions

Prepare the correct trial balance, assuming all accounts have normal balances. (Note:The chart of accounts also includes the following: Dividends and Supplies.)

Reference no: EM13532937

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