Exercise 1.

The following trial balance of Brian's Pickle Co for June 30, 2010 does not balance.

Cash	$ 21,860
Accounts receivable	35,000
Supplies	3,640
Building	51,000
Note payable		$15,500
Owners equity		30,000
Retained earnings		10,000
Revenue		39,500
Expenses	25,000
Total	$136,500	$95,000

The following errors were discovered:

• A purchase of supplies for cash was posted as $40 when it should have been $400.
• The first two numbers of the amount for notes payable were transposed while being copied from the account balance to the trial balance. The correct amount of Notes Payable should be $51,500.
• A collection of cash was debited to the cash account in the amount of $5,500 but was not credited to the Revenue account.
• A purchase of supplies for $725 on account was not recorded.

Instructions: Prepare a corrected trial balance

Exercise 2.

In January 2013, Andrew Wiles organized a service corporation. The company called Services Co, began operations immediately. Transactions during the month of January were as follows:

January 1 The corporation issued shares of capital amounting to $100,000 in exchange for cash

January 2 Purchased an equipment from ABC company for $150,000. Made a $50,000 cash down payment and issued a note payable for the remaining balance

January 4 Paid rent expenses for the month amounting to $3000

January 12 Billed customers $15,200 for services rendered

January 15 Paid an advance payment of $24,000 for the 1-year insurance policy

January 20 Collected $7,300 of the amounts billed to customers on January 12.

January 25 Received advance payment from customers of $15,000

January 31 Paid $8,000 salaries earned by employees in January

January 31 Paid off $ 10,000 of the outstanding amount of the Notes Payable issued on January 2

Adjusting entries:

1. Interest expense of $ 1000 was accrued on Notes Payable issued on January 2.
2. Depreciation on equipment is based on 10-year useful life. The straight line method of depreciation is used
3. Received invoice from advertising company for the payment of $500 advertising expenses
4. Salaries accrued but not paid totaled to $1200
5. As of the end of January, Services Company earned $3,500 of the advance payment received from customers on January 25.
6. Unrecorded income tax expense accrued in January amounted to $400.
7. Insurance expense was recorded for the half month period.

Instructions:

1. Prepare journal entries for each transaction
2. Prepare adjusting entries
3. Post entries to the Ledger accounts using T account format
4. Prepare the Adjusted Trial Balance

224,150 224,150