Question

Weygandt, Financial Accounting, 10e tice Assignment Gradebook ORIONDownloadable eTextbook ment CALCULAT Brief Exercise 2-10 An inexperienced bookkeeper prepared the following trial balance Erika Company Trial balance December 31, 2019 Debit Credit Cash Prepaid Insurance Accounts Payable Unearned Service Revenue Common Stock Dividends Service Revenue Salaries and Wages Expense Rent Expense $16,800 $3,500 3,000 4,200 13,000 4,500 25,600 18,600 2,400 $52,000 Prepare a correct trial balance, assuming all account balances are normal. $39,600 Erika Company Trial balance Debit Credit

Answer 1

The correct trial balance of Erika Company for the year ended December 31, 2019 is shown as follows:-

Erika Company
Trial Balance
December 31, 2019 (Amounts in $)
Account Titles	Debit	Credit
Cash	16,800
Prepaid Insurance	3,500
Accounts Payable		3,000
Unearned Service Revenue		4,200
Common Stock		13,000
Dividends	4,500
Service Revenues		25,600
Salaries and Wages Expense	18,600
Rent Expense	2,400
Total	45,800	45,800

Working Notes:

1) Prepaid Insurance refers to amount of insurance premium paid in advance and considered as a current asset, therefore it should be debited.

2) Unearned service revenue refers to revenue not earned but received in advance and considered as a current liability. It will be Credited in the trial balance.

3)Dividends and rent paid are expenses and hence should be debited.