Sterling Company Trial Balance May 31, 2010 Debit Cash Accounts Receivable Prepaid Insurance Equipment Accounts

payable Property taxes payable M.Sterling, Capital Service Revenue Salaries Expense Advertising Expense Property tax expense 800 $26,800 20,050 6,690 4,200 1,100 560 11,700 700 8000 4500 $5850 2750 Credit

Trial balance supposed to equal $24,930 Following errors: 1. the totals of the debit sides of prepaid insurance, accounts payable, and property tax expense were each understated $100. 2. Transposition errors were made in accounts receivable and service revenue. Based on postings made, the correct balances were $2,570 and $6,960. 3. A debit posting to Salaries expense of $200 was omitted. 4. A $1000 cash drawing by the owner was debited to M.Sterling, Capital for $1,000 and credited to cash for $1000. 5. A $520 purchase of supplies on account was debited to Equipment for $520 and credited to cash for $520.

6. A cash payment of $450 for advertising was debited to Advertising Expense for $45 and credited to cash for $45 7. A collection from a customer for $210 was debited to Cash for $210 and credited to Accounts payable for $210. To help you do the problem, my professor sent this out: The key to this problem is knowing what the normal balance of a certain type of account is. Once you know the normal balance, youll know what increases it and what decreases it. If the normal balance is a debit, a debit increases it. If the normal balance is a credit, a credit increases it. Heres a chart that shows it: Type of account Asset Credit Withdrawals Credit Expenses Debit Normal Bal Debit Debit Debit Increase Debit Debit Credit Decrease

Liability Capital Revenues

Credit Credit Credit

Credit Credit Credit

Debit Debit Debit