Problem - Joe Edmonds, CPA, was retained by Clark Cable Inc. to prepare financial statements for April 2011. Edmonds accumulated all the ledger balances per Clark's records and found the following.
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Clark Cable Inc. Trial Balance April 30, 2011
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Dr.
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Cr.
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Cash
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$4,800
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Accounts Receivable
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3,900
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Supplies
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1,500
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Equipment
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11,300
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Accumulated Depreciation
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$2,050
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Accounts Payable
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2,800
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Salaries Payable
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770
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Unearned Revenue
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1,590
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Common Stock
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10,000
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Retained Earnings
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3,600
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Service Revenue
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6,150
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Salaries Expense
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4,000
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Advertising Expense
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670
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Miscellaneous Expense
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290
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Depreciation Expense
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500
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$26,960
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$26,960
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Joe Edmonds reviewed the records and found the following errors.
1. Cash received from a customer on account was recorded as $840 instead of $480.
2. A payment of $135 for advertising expense was entered as a debit to Miscellaneous Expense $135 and a credit to Cash $135.
3. The first salary payment this month was for $1,970, which included $770 of salaries payable on March 31. The payment was recorded as a debit to Salaries Expense $1,970 and a credit to Cash $1,970. (No reversing entries were made on April 1.)
4. The purchase on account of a printer costing $360 was recorded as a debit to Supplies and a credit to Accounts Payable for $360.
5. A cash payment of repair expense on equipment for $75 was recorded as a debit to Equipment $57 and a credit to Cash $57.
Required -
Prepare an analysis of each error showing (1) the incorrect entry, (2) the correct entry, and (3) the correcting entry. Items 4 and 5 occurred on April 30, 2011.
Prepare a correct trial balance.