The Detection of Errors in a Trial Balance and Preparation of a Corrected Trial Balance (Appendix)

Malcolm Inc. was incorporated on January 1, 2010, with the issuance of capital stock in return for $90,000 of cash contributed by the owners. The only other transaction entered into prior to beginning operations was the issuance of a $75,300 note payable in exchange for building and equipment. The following trial balance was prepared at the end of the fi rst month by the bookkeeper for Malcolm Inc:

Malcolm Inc.

Trial Balance January 31, 2010 Account Titles Debits Credits Cash $ 9,980 Accounts Receivable 8,640 Land 80,000 Building 50,000 Equipment 23,500 Notes Payable $ 75,300 Capital Stock 90,000 Service Revenue 50,340 Wage and Salary Expense 23,700 Advertising Expense 4,600 Utilities Expense 8,420 Dividends 5,000 Totals $208,840 $220,640 Required 1. Identify the two errors in the trial balance. Ignore depreciation expense and interest expense.

2. Prepare a corrected trial balance.

AppendixLO1