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prepare a corrected unadjusted trial balance as of july 31 of the current year 665491

The following records of Mainstay TV Repair are presented in the working papers:

  1. Journal containing entries for the period July 1–31.
  2. Ledger to which the July entries have been posted.
  3. Preliminary trial balance as of July 31, which does not balance.

Locate the errors, supply the information requested, and prepare a corrected trial balance according to the following instructions. The balances recorded in the accounts as of July 1 and the entries in the journal are correctly stated. If it is necessary to correct any posted amounts in the ledger, a line should be drawn through the erroneous figure and the correct amount inserted above. Corrections or notations may be inserted on the preliminary trial balance in any manner desired. It is not necessary to complete all of the instructions if equal trial balance totals can be obtained earlier. However, the requirements of instructions (6) and (7) should be completed in any event.

Instructions

1. Verify the totals of the preliminary trial balance, inserting the correct amounts in the schedule provided in the working papers.

2. Compute the difference between the trial balance totals.

3. Compare the listings in the trial balance with the balances appearing in the ledger, and list the errors in the space provided in the working papers.

4. Verify the accuracy of the balance of each account in the ledger, and list the errors in the space provided in the working papers.

5. Trace the postings in the ledger back to the journal, using small check marks to identify items traced. Correct any amounts in the ledger that may be necessitated by errors in posting, and list the errors in the space provided in the working papers.

6. Journalize as of July 31 the payment of $110 for gas and electricity. The bill had been paid on July 31 but was inadvertently omitted from the journal. Post to the ledger. (Revise any amounts necessitated by posting this entry.)

7. Prepare a new unadjusted trial balance.

Epic Video has the following unadjusted trial balance as of July 31, 2008:

Epic Video Unadjusted Trial Balance July 31, 2008

 

Debit

Credit

 

Balances

Balances

Cash

6,250

 

Accounts Receivable

12,520

 

Supplies

2,232

 

Prepaid Insurance

710

 

Equipment

54,000

 

Notes Payable

 

22,500

Accounts Payable

 

4,980

Carlton Dey, Capital

 

30,400

Carlton Dey, Drawing

11,500

 

Fees Earned

 

178,020

Wages Expense

102,000

 

Rent Expense

20,850

 

Advertising Expense

9,540

 

Gas, Electricity, and Water Expense

5,670

 
 

225,272

235,900

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

a. The balance of cash was overstated by $5,000.

b. A cash receipt of $3,200 was posted as a credit to Cash of $2,300.

c. A debit of $2,780 to Accounts Receivable was not posted.

d. A return of $235 of defective supplies was erroneously posted as a $253 credit to Supplies.

e. An insurance policy acquired at a cost of $500 was posted as a credit to Prepaid Insurance.

f. The balance of Notes Payable was overstated by $4,500.

g. A credit of $600 in Accounts Payable was overlooked when the balance of the account was determined.

h. A debit of $2,000 for a withdrawal by the owner was posted as a debit to Carlton Dey, Capital.

i. The balance of $9,450 in Advertising Expense was entered as $9,540 in the trial balance.

j. Miscellaneous Expense, with a balance of $2,520, was omitted from the trial balance.

Instructions

1. Prepare a corrected unadjusted trial balance as of July 31 of the current year.

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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