Question

Question 5

(20 marks)

Ron Able formed Able Construction, a proprietorship. Ron Able attempted to produce a trial balance, and his trial balance did not balance:

Able Construction
Trial Balance
November 30, 2018
ACCOUNT	DEBIT	CREDIT
Cash	$ 2,100
Accounts Receivable	10,500
Supplies	1,400
Office Furniture	4,100
Land	47,100
Accounts Payable		$ 4,300
Notes Payable		23,500
Ron Able, Capital		32,100
Ron Able, Withdrawals	2,500
Consulting Service Revenue		7,800
Advertising Expense	900
Rent Expense	1,500
Salary Expense	2,600
Utilities Expense	910
Total	$ 73,610	$ 67,700

Able Construction’s accountant, Sue Smart, uncovered the following errors:

1. The cash balance is over stated by $ 150.
2. The cost of the land was $ 43,100, not $ 47,100.
3. A $ 500 purchase of supplies on account was neither journalized nor posted.
4. A $ 2,000 credit to Consulting Service Revenue was not posted.
5. Rent Expense of $ 300 was posted as a credit rather than a debit.
6. The balance of Salary Expense is $ 2,400, but it was listed as $ 2,600 on the trial balance.
7. A $ 500 debit to Accounts Receivable was posted as $ 50. The credit to Consulting Service Revenue was correct.
8. The balance of Utilities Expense was overstated by $ 610.
9. A $ 700 debit to the Ron Able, Withdrawals account was posted as a debit to Ron Able, Capital.

Required:

Prepare Able Construction’s correct trial balance at November 30, 2018. Show your calculations. Journal entries are not required.

Answer 1

Solution: Able Construction Correct Trial Balance November 30, 2018 ACCOUNT Cash Accounts Receivable Supplies Office Furniture Land Accounts Payable Notes Payable Ron Able, Capital Ron Able, Withdrawals Consulting Service Revenue Advertising Expense Rent Expense Salary Expense Utilities Expense Total DEBIT CREDIT 1,950 10,950 1,900 4,100 43, 100 4,800 23,500 32,800 3,200 9,800 900 1,900 2,600 300 70,900 70,900

Wokring: working Bal as given 7800 Ron Able, Ron Able, Consulting Advertising Rent Salary Utilities Cash A/R Supplies Office Furniture Land A/P N/P Capital Withdrawals Service Revenue Exp Exp Exp Exp 2,100 10,500 1,400 4,100 47,100 4,300 23500 32100 2,500 900 1,500 2,600 910 -150 -4000 500 43100-47100 2000 00460 300+300 2600-2500 500-50 600 -200 450 correct bal 1,950 10,950 700 32,800 1,900 700 3,200 4,100 43,100 4,800 23,500 9,800 900 1,900 2,600 300