Question

Question 6) This trial balance of Costello Company does not balance 850 Costello Company Trial Balance May 31, 2020 Cash Debit Credit S 5.340 Accounts Receivable $ 2.090 Prepaid Insurance 700 Equipment 9.000 Accounts Payable 4,100 Income Tax Pavable Common Stock 5.700 Retained Eamines 5.580 Service Revenue 7,690 Salaries Expense 4.200 Advertising Expense 1,100 Income Tax Expense 900 $28,680 $18.570 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 overstated $150. 2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,900 and $7,960, respectively 3. A debit posting to Salaries Expense of $500 was omitted. 4. A $700 cash dividend was debited to Common Stock for $700 and credited to Cash for $700. 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 S409 and credited to Cash for $409. 7. A collection from a customer for $240 was debited to Cash for $24 and credited to Accounts Payable for $24. Instructions Prepare the correct trial balance. (Hint: All accounts have normal balances and the chart of accounts also includes Dividends and Supplies).

Answer 1

C 4 Credit ($) 350 А B 1 Costello Company 2 Trial Balance 3 May 31, 2020 Account Titles Debit ($) 5 Cash $ 5,475 6 Accounts Receivable $ 2,660 7 Supplies $ 350 8 Prepaid Insurance $ 550 9 Equipment $ 8,650 10 Accounts Payable 11 Income Tax Payable 12 Common Stock 13 Retained Earnings 14 Dividends $ 700 15 Service Revenue 16 Salaries Expense $ 4,700 17 Advertising Expense $ 1,181 18 Income Tax Expense $ 750 $ $ $ $ 4,226 850 6,400 5,580 $ 7,960 $ 25,016 $ 25,016

1 4 Credit ($) Costello Company Trial Balance May 31, 2020 Debit ($) =5340+409-490-24+240 =2900-240 350 =700-150 =9000-350 3 Account Titles 5 Cash 6 Accounts Receivable 7 Supplies 8 Prepaid Insurance 9 Equipment 10 Accounts Payable 11 Income Tax Payable 12 Common Stock 13 Retained Earnings 14 Dividends 15 Service Revenue 16 Salaries Expense 17 Advertising Expense 18 Income Tax Expense 19 =4100+150-24 850 =5700+700 5580 700 7960 =4200+500 =1100-409+490 =900-150 20 =SUM(B5:B18) =SUM(C5:C18) | 21

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