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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Errors in trial balance

The following preliminary unadjusted trial balance of Ranger Co., a sports ticket agency, does not balance:

Ranger co.

unadjusted Trail Balance

August 31, 2019

  Debit balances Credit Balances
Cash 77,600  
Accounts Receivable 37,750  
Prepaid insurance   12,000
Equipment 19,000  
Accounts payable   29,100
Unearned Rent   10,800
Carmen Meeks, Capital 110,000  
Carmen Meeks, Drawing 13,000  
Fees Earned   385,000
Wages Expense   213,000
Advertising Expense 16,350  
Miscellaneous Expense   18,400
  273,700 668,300

When the ledger and other records are reviewed, you discover the following: (1) the debits and credits in the cash account total $77,600 and $62,100, respectively; (2) a billing of $9,000 to a customer on account was not posted to the accounts receivable account; (3) a payment of $4,500 made to a creditor on account was not posted to the accounts payable account; (4) the balance of the unearned rent account is $5,400; (5) the correct balance of the equipment account is $190,000; and (6) each account has a normal balance. Prepare a corrected unadjusted trial balance.

To determine

Trial balance:

A trial balance is the summary of all the ledger accounts. The trial balance is prepared to check the total balance of the debit column with the total of the balance of the credit column, which must be equal. The trial balance is usually prepared to check accuracy of ledger balances, and before the preparation of financial statements.

Unadjusted trial balance:

The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making adjusting journal entries.

To prepare: A corrected unadjusted trial balance for Company R.

Explanation

  1. 1. Working note for correct cash balance:

Correct cash balance = (Amount of cash in debit balance -amount of cash in credit balance)=($77,600$62,100)=$15,500

  1. 2. Working note for correct accounts receivable balance:

Correct Accountsreceivable balance} = (Amount of accounts receivable in 

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