Question

ESTRUCE CORPORATION TRIAL BALANCE UNE 30, 2020 Debt Credit 7.60 3,760 8,300 Pevable $8,396 Common Stock 12,500 ned Earnings 3,300 Service Revenue 5,461 Office Expense 4,640 $32,012 $29,652 An examination of the ledger shows these errors. 1. Cash received from a customer on account was recorded (both debit and credit) as $1,270 instead of $1,720. 2. The purchase on account of a computer costing $3,500 was recorded as a debit to Office Expense and a credit to Accounts Payable 3. Services were performed on account for a client, $2,450, for which Accounts Receivable was debited $2,450 and Service Revenue was credited $245 A payment of $70 for telephone charges was entered as a debit to Office Expense and a debit to Cash 5. The Service Revenue account was totaled at $5,700 instead of $5,710. From this information prepare a corrected trial balance BLUE SPRUCE CORPORATION TRIAL BALANCE Debit Credit

Answer 1

BLUE SPRUCE CORPORATION TRIAL BALANCE June 30, 2020 Debit Credit Cash $7,762 ($7,452 + $450 - $140) Accounts Receivable $7,410 ($7,860 - $450) Supplies $3,760 Equipment $11,800 ($8,300 + $3,500) Accounts Payable $8,396 Common stock $12,500 Retained Earnings $3,300 Service Revenue $7,676 ($5,461 + $2,205 +$10) Office Expense $1,140 ($4,640 - $3,500) $31,872 $31,872 Working Notes 1 Due to erroneously recording cash receipt from customer as $1,270 instead of $1,720, the cash receipt was short recorded. The difference of $1,720 and $1,270 ie.$450 would be added to the cash balance and accounts receivable would be reduced to that extent 2 Purchase of computer amounting to $3,500 was wrongly debited to office expenses. Hence Equipment should be debited by $3,500 and office expenses should be reduced by $3,500 to rectify the error. 3 While recording service revenue, accounts receivable was correctly debited but service revenue was credited with a wrong amount. The difference amount i.e $2,450 - $245 = $2,205 should be added to service revenue 4 A payment of telephone charges of $70 was debited to office expenses and debited to cash instead of crediting to cash. To rectify the error, cash will be credited twice for $70 once for reversing the wrong entry done and secondly for actual cash payment. The cash balance would be reduced by $70 + $70 = $140 5 Service revenue was short recorded and hence the difference amount $10 should be added to the balance of service revenue account