E3.2 (LO 2) (Corrected Trial Balance) The following trial balance of Wanda Landowska Company does not balance. Your review of the ledger reveals the following. (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated $100. (c) A transposition error was made in Accounts Receivable and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are $2,750 and $6,690, respectively. (d) A debit posting to Advertising Expense of $300 was omitted. (e) A $1,500 cash drawing by the owner was debited to Owner’s Capital and credited to Cash. Wanda Landowska CompanyTrial BalanceApril 30, 2020 Debit Credit Cash $ 4,800 Accounts Receivable 2,570 Prepaid Insurance 700 Equipment $ 8,000 Accounts Payable 4,500 Property Taxes Payable 560 Owner’s Capital 11,200 Service Revenue 6,960 Salaries and Wages Expense 4,200 Advertising Expense 1,100 Property Tax Expense 000000 800 $20,890 $24,500 Instructions Prepare a correct trial balance.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
E3.2 (LO 2) (Corrected
| Wanda Landowska Company Trial Balance April 30, 2020 |
||||
| Debit | Credit | |||
| Cash | $ 4,800 | |||
| Accounts Receivable | 2,570 | |||
| Prepaid Insurance | 700 | |||
| Equipment | $ 8,000 | |||
| Accounts Payable | 4,500 | |||
| Property Taxes Payable | 560 | |||
| Owner’s Capital | 11,200 | |||
| Service Revenue | 6,960 | |||
| Salaries and Wages Expense | 4,200 | |||
| Advertising Expense | 1,100 | |||
| Property Tax Expense | 000000 | 800 | ||
| $20,890 | $24,500 |
Instructions
Prepare a correct trial balance.
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