Answered

Get detailed and reliable answers to your questions with IDNLearn.com. Discover in-depth and trustworthy answers to all your questions from our experienced community members.

The trial balance of Blues Traveler Corporation does not balance.

Debit Credit
Cash $5,912
Accounts Receivable 5,240
Supplies 2,967
Equipment 6,100
Accounts Payable $7,044
Common Stock 8,000
Retained Earnings 2,000
Service Revenue 5,200
Office Expense 4,320
$24,539 $22,244

An examination of the ledger shows these errors.

1. Cash received from a customer on account was recorded (both debit and credit) as $1,790 instead of $2,060.
2. The purchase on account of a computer costing $3,088 was recorded as a debit to Office Expense and a credit to Accounts Payable.
3. Services were performed on account for a client, $2,460, for which Accounts Receivable was debited $2,460 and Service Revenue was credited $435.
4. A payment of $305 for telephone charges was entered as a debit to Office Expense and a debit to Cash.
5. The Service Revenue account was totaled at $5,410 instead of $5,490.

Required:
From this information prepare a corrected trial balance.

Sagot :

Anthougoidn

Answer:

Blues Traveler Corporation

Adjusted Trial Balance

Accounts Titles           Debit       Credit

Cash                          $5,572

Accounts Receivable 4,970

Supplies                     2,967

Equipment                  9,188

Accounts Payable                      $7,044

Common Stock                           8,000

Retained Earnings                      2,000

Service Revenue                        7,305

Office Expense        1,232

Suspense                   420

Totals                 $24,349     $24,349

Explanation:

Unadjusted Closing Trial Balance

Accounts Titles           Debit       Credit

Cash                          $5,912

Accounts Receivable 5,240

Supplies                     2,967

Equipment                  6,100

Accounts Payable                      $7,044

Common Stock                           8,000

Retained Earnings                      2,000

Service Revenue                        5,200

Office Expense        4,320

Totals                  $24,539     $22,244

Correction of errors:

1. Understatement of cash received by $270

This will increase Cash by $270 and Accounts Receivable will be reduced by $270

Debit Cash $270

Credit Accounts Receivable $270

To correct the error above.

2. This is error of commission:

Office expenses are overstated and Equipment understated by $3,088 respectively.

Debit Equipment $3,088

Credit Office expense $3,088

To correct the error.

3. Service Revenue will be increased by $2,025 ($2,460 - $435)

4. Cash will be reduced by $610 ($305 * 2)

5. Service Revenue will be increased by $80 ($5,490 - $5,410).

Cash:

As per Trial Balance $5,912

1. Accounts receivable 270

4, Reduction                (610)

Adjusted balance   $5,572

Accounts Receivable

As per Trial Balance $5,240

1. Cash                           (270)

Adjusted balance     $4,970

Equipment:

As per Trial Balance $6,100

2. Office expenses    3,088

Adjusted balance    $9,188

Office Expenses:

As per Trial Balance $4,320

2. Equipment             (3,088)

Adjusted balance     $1,232

Service Revenue

As per Trial balance $5,200

3.  addition                  2,025

5.  addition                       80

Adjusted balance    $7,305        

Thank you for being part of this discussion. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. For trustworthy answers, visit IDNLearn.com. Thank you for your visit, and see you next time for more reliable solutions.