Textbook Problem

Corrected trial balance

The Lexington Group has the following unadjusted trial balance as of May 31, 2018:

The Lexington Group Unadjusted Trial Balance May 31, 2018
	Debit Balances	Credit Balances
Cash	20,350
Accounts Receivable	37,000
Supplies	1,100
Prepaid Insurance	200
Equipment	171,175
Notes Payable		36,000
Accounts Payable		26,000
Common Stock		50,000
Retained Earnings		94,150
Dividends	15,000
Fees Earned		429,850
Wages Expense	270,000
Rent Expense	63,000
Advertising Expense	25,200
Miscellaneous Expense	5,100
	608,125	636,000

The debit and credit totals are not equal as a result of the following errors:

• A. The cash entered on the trial balance was overstated by $7,000.
• B. A cash receipt of $8,200 was posted as a debit to Cash of $2,800.
• C. A debit of $ 16,500 to Accounts Receivable was not posted.
• D. A return of $125 of defective supplies was erroneously posted as a $1,250 credit to Supplies.
• E. An insurance policy acquired at a cost of $3,600 was posted as a credit to Prepaid Insurance.
• F. The balance of Notes Payable was understated by $9,000.
• G. A credit of $10,000 in Accounts Payable was overlooked when determining the balance of the account.
• H. A debit of $5,000 for dividends was posted as a credit to Retained Earnings.
• I. The balance of $60,300 in Rent Expense was entered as $63,000 in the trial balance.
• J. Gas, Electricity, and Water Expense, with a balance of $16,350, was omitted from the trial balance.

Instructions

1. 1. Prepare a corrected unadjusted trial balance as of May 31, 2018.
2. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.