Question

The following trial balance of Metlock Company does not balance. Your review of the ledger reveals the following. (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated $92. (c) A transposition error was made in Accounts Receivable and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are $2.640 and $6.790, respectively. (d) A debit posting to Advertising Expense of $307 was omitted. (e) A $1,370 cash drawing by the owner was debited to Owner's Capital and credited to Cash Metlock Company Trial Balance April 30, 2020 Debit Credit Cash $4,360 Accounts Receivable 2,460 766 Prepaid Insurance Equipment $7,310 4,280 Accounts Payable Property Tax Payable 545 Owner's Capital 10,295 Service Revenue 6,970 Salaries and Wages Expense 4,281 Advertising Expense 1.110 Property Tax Expense 860 $20,492 $22,745 Prepare a correct trial balance.

Answer 1

Answer:

Metlock Company
Trial Balance
April 30,2020
	Debit	Credit
Cash	$4,360
Accounts receivable	$2,640
Prepaid insurance	$858
Equipment	$7,310
Accounts payable		$4,188
Property Tax payable		$545
Owner's Capital		$11,665
Owner's drawings	$1,370
Service revenue		$6,790
Salaries and wages expense	$4,281
Advertising expense	$1,417
Property Tax Expense	$952
Total	$23,188	$23,188

Explanations:

i.Due to debit footings understatement,

Prepaid insurance and property tax expense added up by $92 and Accounts payable deducted by $92

ii.Equipment and property tax expense should be a 'Debit balance' &

Property tax payable and Service revenue should be a 'credit balance'.

iii. $307 added to 'Advertising expense' because it was omitted earlier.

iv.$1,370 was added to 'Owner's Capital' because it was debited earlier. and this $1,370 added to 'Owner's drawings'.

v. Rectified accounts receivable and service revenue balances.