Question

The following trial balance was prepared from the ledger accounts of Ricardo Company: RICARDO COMPANY Trial Balance April 30, Year 2 Account Titles Debit Credit Cash $ 71,900 Accounts receivable 36,000 Supplies 2,400 Prepaid insurance 4,200 Land $ 11,000 Accounts payable 10,200 Common stock 100,000 Retained earnings 29,640 Dividends 8,600 Service revenue 70,000 Rent expense 10,200 Salaries expense 32,700 Operating expense 33,600 Totals $ 199,600 $ 220,840 When the trial balance failed to balance, the accountant reviewed the records and discovered the following errors: The company received $590 as payment for services rendered. The credit to Service Revenue was recorded correctly, but the debit to Cash was recorded as $770. A $1,200 receipt of cash that was received from a customer on accounts receivable was not recorded. A $580 purchase of supplies on account was properly recorded as a debit to the Supplies account. However, the credit to Accounts Payable was not recorded. Land valued at $11,000 was contributed to the business in exchange for common stock. The entry to record the transaction was recorded as a $11,000 credit to both the Land account and the Common Stock account. A $800 rent payment was properly recorded as a credit to Cash. However, the Salaries Expense account was incorrectly debited for $800.

Answer 1

Question Completion:

Prepare the corrected Trial Balance of Ricardo Company.

Answer:

RICARDO COMPANY

The corrected Trial Balance April 30, Year 2

Account Titles Debit Credit

Cash $ 72,920

Accounts receivable 34,800

Supplies 2,400

Prepaid insurance 4,200

Land 11,000

Accounts payable $10,780

Common stock 100,000

Retained earnings 29,640

Dividends 8,600

Service revenue 70,000

Rent expense 11,000

Salaries expense 31,900

Operating expense 33,600

Totals $ 210,420 $ 210,420

Step-by-step explanation:

a) Data and Calculations:

RICARDO COMPANY

Trial Balance April 30, Year 2

Account Titles Debit Credit

Cash $ 71,900

Accounts receivable 36,000

Supplies 2,400

Prepaid insurance 4,200

Land $11,000

Accounts payable 10,200

Common stock 100,000

Retained earnings 29,640

Dividends 8,600

Service revenue 70,000

Rent expense 10,200

Salaries expense 32,700

Operating expense 33,600

Totals $ 199,600 $ 220,840

Cash Account:

Account Titles Debit Credit

Balance $ 71,900

Overstated service revenue 180

Accounts receivable 1,200

Balance $72,920

Totals $73,100 $73,100

Balance $72,920

Accounts Receivable

Account Titles Debit Credit

Balance $36,000

Cash $1,200

Balance $34,800

Totals $36,000 $36,000

Balance $34,800

Accounts Payable

Account Titles Debit Credit

Balance $10,200

Supplies 580

Balance $10,780

Totals $10,780 $10,780

Balance $10,780

Land

Account Titles Debit Credit

Balance $11,000

Correction of error $22,000

Balance $11,000

Totals $22,000 $22,000

Balance $11,000

Salaries Expense

Account Titles Debit Credit

Balance $32,700

Rent Expense $800

Balance $31,900

Totals $32,700 $32,700

Balance $31,900

Rent Expense

Account Titles Debit Credit

Balance $10,200

Salaries Expense 800

Balance $11,000

Totals $11,000 $11,000

Balance $11,000