# Errors in trial balance Identify the errors in the following trial balance. All accounts have normal balances. Mascot Co. Unadjusted Trial Balance For the Month Ending July 31,2016 Debit Balances Credit Balances 36,000 Accounts Receivable 112,600 Prepaid Insurance 18,000 Equipment 375,000 Accounts Payable 53,300 Salaries Payable 7,500 Common Stock 100,000 Retained Earnings 197,200 Dividends 17,000 Service Revenue 682,000 Salary Expense 396,800 Advertising Expense 73,000 Miscellaneous Expense 11,600 1,189,300 1,189,300

### Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Chapter
Section

### Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
Chapter 2, Problem 2.20EX
Textbook Problem
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## Errors in trial balanceIdentify the errors in the following trial balance. All accounts have normal balances. Mascot Co. Unadjusted Trial Balance For the Month Ending July 31,2016   Debit Balances Credit Balances   36,000   Accounts Receivable   112,600 Prepaid Insurance 18,000   Equipment 375,000   Accounts Payable 53,300   Salaries Payable   7,500 Common Stock   100,000 Retained Earnings   197,200 Dividends   17,000 Service Revenue   682,000 Salary Expense 396,800   Advertising Expense   73,000 Miscellaneous Expense 11,600     1,189,300 1,189,300

To determine

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.

To identify: The errors in the trial balance given.

### Explanation of Solution

• The Trial balance should be dated in the format “July 31, 2016” but it is dated as “For the month ending July 31, 2016”.
• The accounts receivable normally shows a debit balance. Hence the accounts receivable should be posted in the debit column, but here it is posted in the credit column.
• Similarly, the accounts payable normally shows a credit balance. Hence the accounts payable should be posted in the credit column, but here it is posted in the debit column.
• The dividends normally show a debit balance. Hence the dividends should be posted in the debit column, but here it is posted in the credit column.
• The advertising expense normally shows a debit balance. Hence the advertising expense should be posted in the debit column, but here it is posted in the credit column.
• The total of the debit balance in the trial balance is incorrect. The sum is \$890,700 but it shows a balance of \$1,189,300.

The corrected trial balance of Company M for July 31, 2016 is as follows:

 Company M Unadjusted Trial balance

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