Question

FULL SCREEN PREMIER VERSION BACK Question 7 Terry Zelinski, the owner of Larkspur Mountain Tours, prepared the following trial balance at March 31, 2021 Cash $13,140 Accounts receivable 3,130 Supplies 860 Equipment 7,320 Accounts payable $2,900 T. Zelinski, capital 23,820 T. Zelinski, drawings 3,620 Service revenue 6,550 Advertising expense 3,670 Salaries expense 410 Totals $35080 $30, 340 A review shows that Terry made the following errors in the accounting records 1. A purchase of $200 of supplies on account was recorded as a credit to cash. The debt entry was correct. 2. A $200 credit to accounts receivable was posted as $2,000 3. A journal entry to record service revenue of $870 earned on account was not prepared or posted 4. A journal entry to record the payment of $340 for an advertising expense was correctly prepared but the credit to cash was posted as a debit. The debit to advertising expense was properly posted. Prepare the correct trial balance at March 31, 2021, using the format shown in the chapter (st: You should also make sure that the account balances are recorded in the correct columns on the trial balance) LARKSPUR MOUNTAIN TOURS Trial Balance Debit Credit

Answer 1

Larkspur Mountain Tours
Corrected Trial Balance
For the year ended March 31, 2021
Particulars	Debit	Credit
Cash (13,140 + 200 - 680)	12,660
Accounts receivable (3,130 + 1,800 + 870)	5,800
Supplies	860
Equipment	7,320
Accounts payable (2,900 + 200)		3,100
Capital		23,820
Drawings	3,620
Service revenue (6,550 + 870)		7,420
Advertising expense	3,670
Salaries expense	410
	34,340	34,340

Adjustment for errors made
Error	Wrong entry	Correct entry	Rectification entry	Amount
1	Supplies		Supplies		Cash		200
	To	Cash	To	Accounts payable	To	Accounts payable
2	Credit for $ 2,000	Credit for $ 200	Debit the difference (1,800)	1,800
	to Accounts receviable	to Accounts receviable	to Accounts receviable
3	No entry passed	Accounts receivable	Accounts receivable	870
			To	Service Revenue	To	Service Revenue
4	Debit to cash for $ 340	Credit to cash for $ 340	Cancel the debit & make credit	680
					So, Credit to cash for $ 680