The following trial balance of Messed Up Ltd., at the end of its first year of operations, May 31, 2018, does not balance:

Each of the listed accounts has a normal balance. However, each account may not have been listed in the appropriate debit or credit column. In addition, an examination of the general ledger and general journal reveals the following errors:
1. Prepaid Insurance, Accounts Payable, and Income Tax Expense were each understated by $100.
2. A transposition (reversal of digits) error was made in Service Revenue. Based on the posting made, the correct balance was $14,259.
3. A $750 dividend declared and paid to shareholders was debited to Salaries Expense and credited to Cash.
4. A $120 collection on account was recorded as a debit to Accounts Payable and a credit to Accounts Receivable.
5. A $2,000 bank loan was signed in exchange for the purchase of equipment. The transaction was neither journalized nor posted.
Instructions
(a) Identify
(1) Any accounts listed in the wrong debit or credit column and
(2) The effects of errors 1 to 5, if any, on the trial balance.
(b) Prepare a corrected trial balance.

Transcribed Image Text:

Debit Credit Cash Accounts receivable Equipment Accumulated depreciation-equipment Accounts payable Common shares Service revenue Salaries expense Depreciation expense Advertising expense Insurance Income tax expense $ 2,997 2,630 9,200 4,200 4,600 4,250 S 14,529 8,150 1,100 1,132 600 400 $27,877$26,911 expense