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Chapter 2: 27E (page 99)

Question: Correcting errors in a trial balance

The following trial balance of Joy McDowell Tutoring Service as of May 31, 2018, does not balance.

Account Title Office Supplies Cash Debit Credit Accounts Receivable Computer Equipment Accounts Payable Utilities Payable Common Stock Dividends Service Revenue Salaries Expense Utilities Expense Rent Expense Total Balance \( 33,100 11,600 \) 11,100 9,600 800 \( 2,800 \) 35,000 1,900 800 700 2,000 600 15,800 10,400

Investigation of the accounting records reveals that the bookkeeper:

a. Recorded a \(400 cash revenue transaction by debiting Accounts Receivable. The credit entry was correct.

b. Posted a \)2,000 credit to Accounts Payable as \(200.

c. Did not record Utilities Expense or the related Utilities Payable in the amount of \)300.

d. Understated Common Stock by $100.

Prepare the corrected trial balance as of May 31, 2018, complete with a heading; journal entries are not required.

Short Answer

Expert verified

The dividends are the profit that is distributed to the owners of the business and the required corrected trial balance is prepared in step 2.

Step by step solution

01

Step-by-Step SolutionStep 1 Definition of Dividends

The dividends are defined as the part of profits that are distributed among the shareholders or the owners of the business.

02

Preparation of corrected Trial Balance

Joy McDowell Tutoring Service

Corrected Trial Balance

May 31, 2018

Account Title

Debit ($)

Credit ($)

Cash

$3,200

Accounts Receivable

$1,600

Office Supplies

$600

Computer Equipment

$15,800

Accounts Payable

$12,900

Utilities Payable

$1,100

Common Stock

$11,700

Dividends

$10,400

Service Revenue

$9,600

Salaries Expense

$1,900

Rent Expense

$800

Utilities Expense

$1,000

Total

$35,300

$35,300

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Most popular questions from this chapter

Consider the following accounts and identify each as an asset (A), liability (L), or equity (E). 1. Rent Expense 6. Accounts Payable 2. Common Stock 7. Unearned Revenue 3. Furniture 8. Notes Receivable 4. Service Revenue 9. Dividends 5. Prepaid Insurance 10. Insurance Expense

Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:

Sep. 1 Received \(48,000 cash and issued common stock to Simpson.

4 Purchased office supplies, \)1,200, and furniture, \(1,300, on account.

6 Performed services for a law firm and received \)1,900 cash.

7 Paid \(18,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.

14 Paid for the furniture purchased on September 4 on account.

15 Paid assistant鈥檚 semimonthly salary, \(1,500.

17 Received cash on account, \)1,000.

20 Prepared a design for a school on account, \(650.

25 Received \)2,100 cash for design services to be performed in October.

28 Received \(2,900 cash for consulting with Plummer & Gordon.

29 Paid \)600 cash for a 12-month insurance policy starting on October 1.

30 Paid assistant鈥檚 semimonthly salary, \(1,500.

30 Paid monthly rent expense, \)600.

30 Received a bill for utilities, \(350. The bill will be paid next month.

30 Paid cash dividends of \)3,700.

Requirements 1. Record each transaction in the journal using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Furniture; Accounts Payable; Utilities Payable; Unearned Revenue; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.

If total debits equal total credits on the trial balance, is the trial balance error-free? Explain your answer.

For each account, identify if the change would be recorded as a debit (DR) or credit (CR).

11. Increase to Cash 16. Increase to Interest Revenue

12. Decrease to Accounts Payable 17. Increase to Rent Expense

13. Increase to Common Stock 18. Decrease to Office Supplies

14. Increase to Unearned Revenue 19. Increase to Prepaid Rent

15. Decrease to Accounts Receivable 20. Increase to Notes Payable

Question: Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Vince York practices medicine under the business title Vince York, M.D. During July, the medical practice completed the following transactions:

Jul. 1 York contributed \(63,000 cash to the business in exchange for common stock.

5 Paid monthly rent on medical equipment, \)510.

9 Paid \(23,000 cash to purchase land to be used in operations.

10 Purchased office supplies on account, \)1,600.

19 Borrowed \(22,000 from the bank for business use.

22 Paid \)1,100 on account.

28 The business received a bill for advertising in the daily newspaper to be paid in August, \(240.

31 Revenues earned during the month included \)6,400 cash and \(6,000 on account.

31 Paid employees鈥� salaries \)2,200, office rent \(1,900, and utilities \)560. Record as a compound entry.

31 The business received \(1,120 for medical screening services to be performed next month.

31 Paid cash dividends of \)7,200.

The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; and Advertising Expense.

Requirements 1. Journalize each transaction. Explanations are not required
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