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Corrected trial balance Tech Support Services has the following unadjusted trial balance as of January 31, 20Y5: 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 $8,000. b. A cash receipt of $4,100 was posted as a debit to Cash of $1,400. c. A debit of $12,350 to Accounts Receivable was not posted. d. A return of $235 of defective supplies was erroneously posted as a $325 credit to Supplies. e. An insurance policy acquired at a cost of $3,000 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was overstated by $21,000. g. A credit of $3,450 in Accounts Payable was overlooked when the balance of the account was determined. h. A debit of $6,000 for dividends was posted as a debit to Retained Earnings. i. The balance of $28,350 in Advertising Expense was entered as $23,850 in the trial balance. j. Miscellaneous Expense, with a balance of $4,600, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of January 31, 20Y5. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 2, Problem 5PB
Textbook Problem
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Corrected trial balance

Tech Support Services has the following unadjusted trial balance as of January 31, 20Y5:

Chapter 2, Problem 5PB, Corrected trial balance Tech Support Services has the following unadjusted trial balance as of

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 $8,000.

b. A cash receipt of $4,100 was posted as a debit to Cash of $1,400.

c. A debit of $12,350 to Accounts Receivable was not posted.

d. A return of $235 of defective supplies was erroneously posted as a $325 credit to Supplies.

e. An insurance policy acquired at a cost of $3,000 was posted as a credit to Prepaid Insurance.

f. The balance of Notes Payable was overstated by $21,000.

g. A credit of $3,450 in Accounts Payable was overlooked when the balance of the account was determined.

h. A debit of $6,000 for dividends was posted as a debit to Retained Earnings.

i. The balance of $28,350 in Advertising Expense was entered as $23,850 in the trial balance.

j. Miscellaneous Expense, with a balance of $4,600, was omitted from the trial balance.

Instructions

1. Prepare a corrected unadjusted trial balance as of January 31, 20Y5.

2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.

(1)

To determine

Prepare a corrected unadjusted trial balance as of January 31, 20Y5.

Explanation of Solution

Corrected unadjusted trial balance:

The corrected unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts after making adjusting journal entries. The corrected unadjusted trial balance is also known as adjusted trial balance.

Prepare a corrected unadjusted trial balance as of January 31, 20Y5.

Company TSS
Unadjusted Trial Balance
January 31, 20Y5
AccountsDebit BalancesCredit Balances
Cash (1)20,250 
Accounts Receivable56,400 
Supplies6,750 
Prepaid Insurance9,600 
Equipment162,000 
Notes payable 54,000
Accounts payable 16,650
Common stock 18,000
Retained earnings 89,850
Dividends39,000 
Fees earned 534,000
Wages expense306,000 
Rent expense62,550 
Advertising expense28,350 
Gas, Electricity, and Water expense17,000 
Miscellaneous expenses4,600 
 Totals712,500712,500

Table (1)

Working notes (1):

a. Calculate the amount of cash:

Cash={(Cash (unadjusted)Overstated cash+Incorrect posting of cash receipt debited to cash account (b.))}={($25,550$8,000)+($4,100$1,400)}=$25,550

c.

An amount of $12,350 was not debited to accounts receivable (asset) account. Hence, by debiting the amount, the accounts receivable in the corrected unadjusted trial balance would be $56,400[$44,050(unadjusted)+$12,350].

d.

As a return of defective supplies of $235 was wrongly credited to the supplies (asset) account as $325, it is to be corrected by debiting the Supplies account with an amount of $90($325$235)

2.

To determine

Discuss whether the fact of the balancing of unadjusted trial balance in (1) means that there are no errors in the accounts.

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Chapter 2 Solutions

Financial And Managerial Accounting
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