Mastery Problem: Analyzing Transactions KL Company Inc. T accounts Transactions Trial Balance: Unequal Totals Trial Balance: Correct Taccounts KL Company Inc. Cash Bal. 8,000.00 2,300.00 3/3 3/27 In February, Katie Long formed KL Company Inc. Transactions for the month of March have been posted to the T accounts. An intern has prepared a trial balance from the T accounts, but there seem to be some errors. 3/25 7,800.00 1,300.00 3/28 5,000.00 3/29 3,575.00 Required: 3/30 7,900.00 3/31 1,850.00 Accounts Receivable 1. In the Transactions panel, descriptions of the transactions for the month of March are provided. Each of the transactions in the Transactions panel has been posted to the T accounts. Referring to the T accounts, select the date on which each transaction occurred, enter the amount of the transaction, and select the account to debit and credit. Bal. 1,950.00 3/18 9,950.00 3/30 7,900.00 Supplies 2. The trial balance prepared by the intern can be found in the Trial Balance: Unequal Totals panel. The intern is puzzled by the unequal totals. Prepare a corrected trial balance on the Trial Balance: Correct panel. 3. Compare the trial balance prepared by the intern (Trial Balance: Unequal Totals) to the trial balance that you prepared Bal. 225.00 1,500.00 (Trial Balance: Correct). Use the table provided in the Errors in Trial Balance panel to select the accounts for each type of error. Office Equipment 4. The intern is puzzled and asks "Are you sure the accounting 16,500.00 equation is still in balance?" Using the corrected trial balance you prepared, prove that the accounting equation is in balance. Still puzzled, the intern asks "Why do none of the amounts in the accounting equation equal the totals on the trial balance? Explain. Accounts Payable 3/27 1,300.00 Bal. 1,250.00 37 1,500.00 Notes Payable 16,500.00 Accounting Equation Common Stock The intern is puzzled and asks "Are you sure the accounting equation is still in balance?" Using the corrected trial balance you prepared, prove that the accounting equation is in balance. Bal 7,500.00 Assets Liabilities Stockholders' Equity 3/28 5,000.00 Still puzzled, the intern asks "Why do none of the amounts in the accounting equation equal the totals on the trial balance? Check all that apply. Retained Earnings Bal. 1,425.00 You point out the total of the assets, liabilities and stockholders' equity is equal to the sum of the debit and credit totals in the trial balance. Dividends The accounts that make up the total for stockholders' equity have a mix of debit and credit balances. 3/31 1,850.00 The accounts with debit balances are not all classified in the same element of the accounting equation. For example, not all accounts with debit balances are assets. Fees Earned This is because the revenue and expense accounts are part of the stockholders' equity 3/18 9,950.00 element. The accounts with debit balances should be part of the total assets. 3/25 7,800.00 The accounts with credit balances are not all classified in the same element of the accounting equation. For example, not all accounts with credit balances are liabilities. Rent Expense 2,300.00 Wages Expense 3/29 3,575.00 Trial Balance: Unequal Totals The intern has prepared the following trial balance for the month of March. KL Company Inc. UNADJUSTED TRIAL BALANCE March 31, 2017 ACCOUNT TITLE DEBIT CREDIT Cash 24,275.00 Accounts Receivable 4,000.00 Supplies 1,725.00 Office Equipment 16,500.00 Accounts Payable 1,450.00 Notes Payable 16,500.00 7 Common Stock 12,500.00 Retained Earnings 1,425.00 Dividends 1,850.00 10 Fees Earned 9,950.00 3,200.00 11 Rent Expense 12 Wages Expense 13 Totals 3,575.00 48,575.00 48,375.00 Trial Balance: Correct Shaded cells have feedback The trial balance prepared by the intern can be found in the Trial Balance: Unequal Totals panel. The intern is puzzled by the unequal totals. Prepare a corrected trial balance. Question not attempted. Score: 0/51 KL Company Inc. UNADJUSTED TRIAL BALANCE March 31, 2017 ACCOUNT TITLE DEBIT CREDIT 1 Cash 2 Accounts Receivable 3 Supplies Office Equipment 5 Accounts Payable 6 Notes Payable 7 Common Stock 8 Retained Earnings 9 Dividends 10 Fees Earned 11 Rent Expense 12 Wages Expense 13 Totals