Prepare a correct trial balance.

P2.4 (LO 4) The trial balance of De Bortoli Co. shown below does not balance.

The trial balance of the Mukhtar Company shown below does not balance.

Mukhtar Company

Trial Balance

September 30, 2019

Debit                           Credit

Cash $                                                 3,850

Accounts Receivable                                                              $ 2,750

Prepaid Insurance                               700

Equipment                                           12,000

Accounts Payable                                                                   4,500

Unearned Service Revenue                 560

Common Stock                                                                       11,700

Service Revenue                                 8,690

Salaries and Wages Expense               4,200

Advertising Expense                                                               1,100

Utilities Expense                                 800

$30,800                       $20,050

Your review of the ledger reveals that each account has a normal balance. You also discover the following errors.

1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Utilities Expense were each understated $100.
2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,570 and $8,960, respectively.
3. A debit posting to Salaries and Wages Expense of $200 was omitted.
4. A $1,000 cash dividend was debited to Common Stock for $1,000 and credited to Cash for $1,000.
5. A $520 purchase of supplies on account was debited to Equipment for $520 and credited to Cash for $520.
6. A cash payment of $450 for advertising was debited to Advertising Expense for $45 and credited to Cash for $45.
7. A collection from a customer for $420 was debited to Cash for $420 and credited to Accounts Payable for $420.

Instructions

1. Prepare a correct trial balance. Note that the chart of accounts includes the following:

Dividends and Supplies.

1. Make T accounts and post the corrections in these accounts to reach the corrected trial balance

The trial balance of Gamo Company does not balance. Your review of the ledger reveals the following: (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated Br. 1,000. (c)  A transposition  error  was  made  in Accounts  Receivable  and Service  Revenue; the correct balances for Accounts Receivable and Service Revenue are Br. 2,750 and Br. 6,690, respectively. (d) A debit posting to Advertising Expense of Br. 300 was omitted. (e) A Br.

3,200 cash drawing by the owner was debited to Geronimo, Capital, and credited to Cash.

Gamo Company Trial Balance April 30, 2015

Cash

Accounts Receivable Prepaid Insurance Equipment

Accounts Payable Property Tax Payable Gamo, Capital Service Revenue Salaries Expense Advertising Expense

Property Tax Expense

Debit

Credit

Br.  2,100

2,570

700

560

6,960

4,200

1,100

               .

Br. 18,190

Br.   8,000

4,500

11,200

           800

Br. 24,500

Required: Prepare a correct trial balance.

1. The trial balance of Gamo Company does not balance. Your review of the ledger reveals the following: (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated Br. 1,000. (c) A transposition  error  was  made  in Accounts  Receivable  and Service  Revenue; the correct balances for Accounts Receivable and Service Revenue are Br. 2,750 and Br. 6,690, respectively. (d) A debit posting to Advertising Expense of Br. 300 was omitted. (e) A Br.

3,200 cash drawing by the owner was debited to Geronimo, Capital, and credited to Cash.

Gamo Company Trial Balance April 30, 2015

Cash

Accounts Receivable Prepaid Insurance Equipment

Accounts Payable Property Tax Payable Gamo, Capital Service Revenue Salaries Expense Advertising Expense

Property Tax Expense

Debit

Credit

Br.  2,100

2,570

700

560

6,960

4,200

1,100

               .

Br. 18,190

Br.   8,000

4,500

11,200

           800

Br. 24,500

Required: Prepare a correct trial balance.