Problem - The trial balance of the Sterling Company shown below does not balance.
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STERLING COMPANY Trial Balance May 31, 2010
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Cash
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$ 5,849
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Accounts Receivable
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$2,750
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Prepaid Insurance
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699
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Equipment
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7,681
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Accounts Payable
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4,270
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Property Taxes Payable
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556
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M.Sterling, Capital
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12,301
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Service Revenue
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6,690
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Salaries Expense
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4,604
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Advertising Expense
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1,073
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Property Tax Expense
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794
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$26,873
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$20,394
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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 $194.
2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,570 and $6,960, respectively.
3. A debit posting to Salaries Expense of $235 was omitted.
4. A $1,251 cash drawing by the owner was debited to M. Sterling, Capital for $1,251 and credited to Cash for $1,251.
5. A $530 purchase of supplies on account was debited to Equipment for $530 and credited to Cash for $530.
6. A cash payment of $500 for advertising was debited to Advertising Expense for $50 and credited to Cash for $50.
7. A collection from a customer for $173 was debited to Cash for $173 and credited to Accounts Payable for $173.
Instructions - Prepare a correct trial balance. Note that the chart of accounts includes the following: M. Sterling, Drawing, and Supplies.