Question

© Data Table Creative Tots Child Care Trial Balance August 31, 2018 Balance Credit Debit 8,420 6,200 1,600 300 89,500 Account Title Cash Accounts Receivable Office Supplies Prepaid Insurance Equipment Accounts Payable Notes Payable Common Stock Dividends Service Revenue Salaries Expense 3,900 55,000 51,500 3,380 4,200 Rent Expense 3,800 900 114,100 $ 114,600 Total Print Done

Answer 1

Correction for every point is as follows:

a. As cash is understated by 1200, we will increase the cash balance by 1200. Updated cash balance = 9620

b. As incorrect credit to Accounts receivable was made, we will credit Accounts receivable twice, one to nullify the mistake and second to have the correct recording. Updated balance of Accounts receivable = 15600

c. Entry was not recorded. So entry would be=

Office Supplies A/c Dr. 1000

To Accounts Payable 1000

d. As equipment was incorrectly transferred, Correct balance of equipment is 81500. (reduction of 8000)

e. As salary is overstated by 600, we will reduce it. Updated balance of salaries expense = 3200

f. Entry was not recorded. So the entry:

Advertising expense A/c Dr 600

To Cash A/c 600

Updated cash balance = 9020

g. 120 cash dividend was incorrectly recorded as 1200. So 1080 was over paid in accounts.to rectify:

Cash A/c Dr. 1080

To Dividend A/c 1080

Updated cash account = 10100

h. Service revenue is understated by 4300. so by increasing the amount, new service revenue balance = 8500

i. Prepaid insurance was incorrectly posted. to correct it we will debit it twice by 1400. So updated balance of prepaid insurance = 3100.

Correct Trial Balance

	Balance
Account Title	Debit	Credit
Cash	10100
Accounts Receivable	15600
Office Supplies	2600
Prepaid Insurance	3100
Equipment	81500
Accounts Payable		4900
Notes Payable		55000
Common Stock		51500
Dividends	2300
Service Revenue		8500
Salaries Expense	3200
Advertising expense	600
Rent Expense	900
Total	$119900	$119900