The trial balance of the Sterling Company shown below does not balance. STERLING COMPANY Trial Balance May 31, 2010 Cash $ 5,603 Accounts Receivable $2,750 Prepaid Insurance 628 Equipment 8,294 Accounts Payable 4,414 Property Taxes Payable 535 M.Sterling, Capital 12,169 Service Revenue 6,690 Salaries Expense 4,375 Advertising Expense 1,309 Property Tax Expense 768 $26,893 $20,642 Your review of the ledger reveals that each account has a normal balance. You also discover the following errors. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated $100. Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,570 and $6,960, respectively. A debit posting to Salaries Expense of $231 was omitted. A $1,085 cash drawing by the owner was debited to M. Sterling, Capital for $1,085 and credited to Cash for $1,085. A $540 purchase of supplies on account was debited to Equipment for $540 and credited to Cash for $540. A cash payment of $430 for advertising was debited to Advertising Expense for $43 and credited to Cash for $43. A collection from a customer for $191 was debited to Cash for $191 and credited to Accounts Payable for $191. Instructions Prepare a correct trial balance. Note that the chart of accounts includes the following: M. Sterling, Drawing, and Supplies. (Hint: It helps to prepare the correct journal entry for the transaction described and compare it to the mistake made.) (If answer is zero, please enter 0. Do not leave any fields blank.)

Name: Date: Instructor: Course: Accounting Principles, Ninth Edition by Weygandt, Kieso, and Kimmel Solving Accounting Principles Problems Using Microsoft Excel for Windows by Rex A Schildhouse P2-4A The trial balance of Sterling Company shown below does not balance. STERLING COMPANY Trial Balance May 31, 2010 Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable Property Taxes Payable M. Sterling, Capital Service Revenue Salaries Expense Advertising Expense Property Tax Expense Debit $5,850 Credit $2,750 700 8,000 4,500 560 11,700 6,690 4,200 1,100 800 $26,800 $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 Property Tax Expense were each understated $100 2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on posting made, the correct balances were $2,570 and $6,960 respectively. 3. A debit posting to Salaries Expense of $200 was omitted. $1,000 cash drawing by the owner was debited to M. Sterling, Capital for $1,000 and 4. A 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 and credited to Cash for $45 $210 was debited to Cash for $210 and credited to 7. A collection from a customer for Accounts Payable for $210 Instructions: Prepare a correct trial balance. Note that the chart of accounts includes the following: M. Sterling, Drawing and Supplies. (Hint: It helps to prepare the correct journal entry for the transaction described and compare it to the mistake made.) STERLING COMPANY Trial Balance May 31, 2010 Cash ($5,850 + $520 - $405) Accounts Receivable ($2,570 - $210) Prepaid Insurance ($700 + $100) Supplies ($0 + $520) Equipment ($8,000 - $520) Accounts Payable ($4,500 - $100 + $520 - $210) Property Taxes Payable M. Garland, Capital ($11,700 + $1,000) M. Garland, Drawing ($0 + $1,000) Service Revenue Salaries Expense ($4,200 + $200) Advertising Expense ($1,100 + $405) Property Tax Expense ($800 + $100) Debit Amount Amount Amount Amount Amount Credit Amount Amount Amount Amount Amount Amount Amount Amount Formula Formula FileName: qattachments_2f725a20503b0a1fa4448d250d8abadee568b49e.xlsx , Tab: Problem P2-4A, Page 1 of 1, 08/04/2012