Instructions From this information prepare a corrected trial balance. E3-4 (L02) (Corrected Trial Balance) The following trial balance of Watteau Co. does not balance. WATTEAU CO. TRIAL BALANCE JUNE 30, 2017 Debit Credit Cash Accounts Receivable Supplies Equipment Accounts Payable Unearned Service Revenue Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Office Expense s 2,870 $3,231 800 3,800 2,666 1,200 6,000 3,000 2.380 3,400 940 13,371 $16,916 Each of the listed accounts should have a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors. 1. Cash received from a customer on account was debited for $570, and Accounts Receivable was credited for the same amount. The actual collection was for $750
Expert Answer
Corrected Trial Balance as on June 30,2017
Particulars | Debit | Credit | Working Note Ref |
Cash | $2920 | (3050-65-65) Working Note 1 &4 | |
Accounts Receivable | $3051 | Working Note 1 &4 | |
Supplies | $300 | Working Note 2 | |
Equipment | $4300 | Working Note 2 | |
Accounts Payable | $2200 | Working Note 7 | |
Unearned Service Revenue | $875 | Working Note 5 | |
Common Stock | $6000 | ||
Retained Earnings | $3000 | ||
Service Revenue | $3506 | (2380+801+325) Working Note 3&5 | |
Salaries & Wages | $3495 | (3400+670-575) Working Note 6&8 | |
Office Expense | $940 | ||
Dividend | $575 | ||
TOTAL | $15581 | $15581 |
Working Notes :-
1. Cash account needs to be on debit side as the amount received was 750 and amount debited was 570 hence difference of 180 needs to be added back to the cash account and the accounts receivable should be reduced by 180
Cash- (2870+180)=3050
Accounts Receivable = 3231-180=3051
2. Purchase of computer should go the Equipment account and not Supplies account hence Supplies account should be reduced by 500 and Equipment account the same should be added
Supplies :- 800-300=500
Equipment :- 3800+500=4300
3. Service Revenue was to be debited by 890 but was debited only for 89 hence the difference of 801 (890-89) should be added back to Service Revenue
4. Telephone charges needs to be credited to cash account but wrongly debited hence it should be reduced by 130 i.e 65 for wrong credit and 65 which should be the actual debit
5.Unearned Service Revenue consisted of amount of Rs 325 which was pertaining to period prior to June hence it should be recognised as Service Revenue hence add 325 and reduce 325 from Unearned Income
Unearned Service Revenue =1200-325=875
6. Salaries and Wages Account should be debited by 670 (3400+670)=4070
7. Accounts Payable needs to be debited for 206 but it was credited for 260 hence firstly debit the correct amount of 260 and also debit the 206 amount which is the incorrect amount
(2666-260-206)=2200
8. Dividend is a separate account hence it cannot be charged to Salaries and Wages hence 575 it should be reduced from that and add the same to Dividend Account