Question

The following trial balance of Blues Traveler Corporation does not balance.

BLUES TRAVELER CORPORATION TRIAL BALANCE APRIL 30, 2017

	Debit	Credit
Cash	5912
Accounts Receivable	5240
Supplies	2967
Equipment	6100
Accounts Payable		7044
Common Stock		8000
Retained Earnings		2000
service revenue		5200
Office Expense	4320
	24,539	22,244

1. Cash received from a customer on account was recorded (both debit and credit) as $1,380 instead of $1,830.

2. The purchase on account of a computer costing $3,200 was recorded as a debit to Office Expense and a credit to Accounts Payable.

3. Services were performed on account for a client, $2,250, for which Accounts Receivable was debited $2,250 and Service Revenue was credited $225.

4. A payment of $95 for telephone charges was entered as a debit to Office Expense and a debit to Cash.

5. The Service Revenue account was totaled at $5,200 instead of $5,280. Instructions From this information prepare a corrected trial balance.

Instructions

From this information prepare a corrected trial balance.

Answer 1

Correct Trial balance is as follows:

	Debit	Credit
	$	$
Cash	$   6,172.00
Accounts Receivable	$   4,790.00
Supplies	$   2,967.00
Equipment	$   6,100.00
Accounts Payable		$            7,044.00
Common Stock		$            8,000.00
Retained Earnings		$            2,000.00
Service Revenue		$            7,305.00
Office Expenses	$   1,120.00
Computer	$   3,200.00
	$ 24,349.00	$          24,349.00

Error 1: Cash will increase by 450, and accounts receivable will decrease by 450

Error 2: Purchase of computer on account is a capital expenditure. Hence Computer should be debited. Office expense to reduce by 3,200. Accounts payable correctly credited.

Error 3: Service revenue to increase by 2250-225 = 2025.

Error 4: Cash to be credited twice. Hence cash to be reduced by 190

Error 5: Service revenue to increase by 80