CA5101 – Financial Accounting and Reporting

First Term, Academic Year 2022-2023

CORRECTING THE TRIAL BALANCE

PROBLEM A. Rockwell Repairs Services gave you the following trial balance dated December 31,
2022.

Debit Credit
Cash P4,500
Accounts receivable 27,000
Repair supplies 500
Furniture and fixtures 10,000
Repair equipment 33,100
Accounts payable P5,750
Notes payable 25,250
Rockwell, capital 56,000
Rockwell, drawing 6,000
Service income 135,300
Repair supplies expense 15,000
Rent expense 40,000
Salaries expense 60,000
Utilities expense 25,000
Total P221,500 P221,500

Because of the unequal balances of the debit and credit side of the trial balance, you have
gathered the following information:
a. A debit to Rockwell, drawing P500 was posted to the debit side of Rockwell, capital.
b. A credit to Accounts receivable of P100 was posted to the correct account but as P1,000.
c. A debit to cash of P450 was posted to the debit side of cash as P540.
d. A P500 debit to Furniture and fixtures was posted twice.
e. A P500 debit entry to Salaries expense was not posted.
f. A transaction was credited and posted to Service income P2,000 instead of to Accounts
receivable.
g. A debit to Accounts payable for P195 was posted to the correct account but on the credit
side.
h. A debit to Accounts receivable of P500 was posted to the debit side of Cash.

1. What is the correct total of the trial balance?

2. What is the correct amount of cash?
3. Compute for the total amount of assets.
4. Compute for the total amount of liabilities.
5. How much is the net income/(loss) for the month of December?
6. Compute for the ending balance of capital.
PROBLEM B. The newly hired accountant of Greenbelt Gym Co. has prepared the following trial
balance for the month of July:

Greenbelt Gym Co.

Trial Balance
July 31, 2022

Debits Credits
Cash P329,400
Accounts receivable 100,000
Notes receivable 300,000
Office supplies 15,600
Prepaid insurance P26,400
Gym equipment 460,000
Furniture and fixtures 120,500
Accounts payable 156,300
Greenbelt, capital 1,240,000
Service income 344,400
Salaries expense 30,000
Rent expense 43,000
Taxes and licenses 8,600
Advertising expense 11,600
Utilities expense 9,400
Total P1,389,500 P1,805,700

The following errors have been discovered:

a. The ending cash balance shown on the general ledger is P392,400.
b. A 42,000 debit to accounts receivable was posted on the credit side of the same account.
c. A 27,200 debit to accounts payable was posted on the credit side of the same account.
d. The withdrawal of the owner amounting to P40,000 was recorded as an additional
investment.
e. A debit to the advertising expense account was posted as a credit to the service income
account, P400.
f. The service income account is overstated by P4,000.

7. What is the correct trial balance total?

8. How much is the net income of Greenbelt for the month of July?
9. How much is total assets of the company as of July 31, 2022?
PROBLEM C. The trial balance prepared by the accountant of Samson Company at December 31,
2022 did not balance. Debit total was P580,000 and credit total was P548,000. In determining
the cause of the difference, you discovered the following errors:

a. The wages payable account balance of P93,000 was listed in the trial balance as P39,000.
b. A debit of P5,000 for the drawing account of Samson, the owner, was posted to the credit
side of Samson, capital.
c. A debit entry for accounts receivable was posted to the credit side, P6,000.
d. A P20,000 credit to be made to Service Income account was credited to the Accounts
Receivable account instead.

10. What is the correct trial balance total?