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Horngren'S Financial And Managerial Accounting
Found in: Page 105

Short Answer

Correcting errors in a trial balance

The trial balance of Beautiful Tots Child Care does not balance.

Account Title Debit Credit

Office Supplies 1,000

Cash 7,900

Accounts Receivable 6,700

Prepaid Insurance 300

Equipment 91,500

Accounts Payable 3,400

Notes Payable 45,000

Common Stock 57,000

Dividends 5,000

Service Revenue 12,350

Rent Expense 750

Salaries Expense 4,400

Total Balance $ 117,550 $ 117,750

The following errors are detected:

a. Cash is understated by $1,500.

b. A $4,100 debit to Accounts Receivable was posted as a credit.

c. A $1,400 purchase of office supplies on account was neither journalized nor posted.

d. Equipment was incorrectly transferred from the ledger as $91,500. It should have been transferred as $83,000.

e. Salaries Expense is overstated by $700.

f. A $300 cash payment for advertising expense was neither journalized nor posted.

g. A $200 cash dividend was incorrectly journalized as $2,000.

h. Service Revenue was understated by $4,100.

i. A 12-month insurance policy was posted as a $1,900 credit to Prepaid Insurance. Cash was posted correctly.

Prepare the corrected trial balance as of August 31, 2018. Journal entries are not required.

Rent expense is the cost of using someone else’s property and the required corrected trial balance is prepared in step 2.

See the step by step solution

Step by Step Solution

Step 1: Definition of rent expense

The rent expense is defined as the cost incurred by the business for using the property owned by some other individual or business.

Step 2: Preparation of corrected Trial Balance

Beautiful Tots Child Care

Corrected Trial Balance

August 31, 2018

Account Title


Debit ($)

Credit ($)




Accounts Receivables



Office Supplies



Prepaid Insurance





Accounts Payable



Notes Payable


Common Stock





Service Revenue



Salaries Expense



Rent Expense


Advertising Expense





Step 3 Computation of correction

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