Effect of errors on the trial balance
The following trial balance was prepared from the ledger accounts of Kona Company.
KONA COMPANY Trial Balance April 30,2011 | ||
Account Title | Debit | Credit |
Cash | $ 41,500 |
|
Accounts Receivable | 40,000 |
|
Supplies | 2,400 |
|
Prepaid Insurance | 3,200 |
|
Land |
| $ 10,000 |
Accounts Payable |
| 8,500 |
Common Stock |
| 96,000 |
Retained Earnings |
| 56,720 |
Dividends | 6,000 |
|
Service Revenue |
| 40,000 |
Rent Expense | 7,200 |
|
Salaries Expense | 26,400 |
|
Operating Expense | 65,240 |
|
Totals | $191,940 | $211,220 |
When the trial balance failed to balance, the accountant reviewed the records and discovered the following errors:
1. The company received $470 as payment for services rendered. The credit to Service Revenue was recorded correctly, but the debit to Cash was recorded as $740.
2. A $430 receipt of cash that was received from a customer on accounts receivable was not recorded.
3. A $450 purchase of supplies on account was properly recorded as a debit to the Supplies account. However, the credit to Accounts Payable was not recorded.
4. Land valued at $10,000 was contributed to the business in exchange for common stock. The entry to record the transaction was recorded as a $10,000 credit to both the Land account and the Common Stock account.
5. A $200 rent payment was properly recorded as a credit to Cash. However, the Salaries Expense account was incorrectly debited for $200.
Required
Based on this information, prepare a corrected trial balance for Kona Company.
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