P2-4A, Prepare a correct trial balance

The trial balance of Avtar Sandhu Co. shown below does not balance.

AVTAR SANDHU
Trial Balance
June 30, 2017

Debit Credit
Cash $3,340
Accounts Receivable $2,812
Supplies $1,200
Equipment $2,600
Accounts Payable $3,666
Unearned Service Revenue $1,100
Owner's Capital $8,000
Owner's Drawings $800
Service Revenue $2,480
Salaries and Wages Expense $3,200
Utilities Expense $810
$12,522 $17,486

Each of the listed accounts has a normal balance per the general ledger. An examination of the ledger
and journal reveals the following errors.
1. Cash received from a customer in payment of its account was debited for $580, and Accounts Receivable
was credited for the same account. The actual collection was for $850.
2. The purchase of a computer on account for $710 was recorded as a debit to Supplies for $710 and a credit
to Accounts Payable for $710.
3. Services were performed on account for a client for $980. Accounts Receivable was debited for $980, and
Service Revenue was credited for $98.
4. A debit posting to Salaries and Wages Expense of $700 was omitted.
5. A payment of a balance due for $306 was credited to Cash for $306 and credited to Accounts
Payable for $360.
6. The withdrawal of $600 cash for Sandhu's personal use was debited to Salaries and Wages Expense for $600
and credited to Cash for $600.

Instructions:
Prepare a corrected trial balance. (Hint: It helps to prepare the correct journal entry for the transactions
described and compare it to the mistake made.)
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

AVTAR SANDHU CO.

Trial Balance
June 30, 2017

Debit Credit
Cash Value
 Accounts Receivable Value
Supplies Value
Equipment Value
Accounts Payable Value
Unearned Service Revenue Value
Owner's Capital Value
Owner's Drawings Value
Service Revenue Value
Salaries and Wages Expense Value
Utilities Expense Value
? ?

After you have completed the requirements of P2-4A, consider this additional question.
1. Avtar Sandhu Co. determined that the trial balance was missing the cash receipts for services provided for the month.
The cash receipts totaled $2,640. What would be the new adjusted trial balance for Avtar Sandhu?
nts Receivable

710 and a credit

d for $980, and

s Expense for $600

rmula in cells with a "?" .

ed for the month.
CC2 - Cookie Creations: The Entrepreneurial Journey
(This is a continuation of the Cookie creations problem from Chapter 1.)
After researching the different forms of business organization, Natalie Koebel decides to operate "Cook
proprietorship. She then starts the process of getting the business running. In November 2016, the follow
place.

Nov 8Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank
8 She opens a bank account under the name "Cookie Creations" and transfers $500 from her persona
to the new account.
11 Natalie pays $65 for advertising.
13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.
(Hint: Use Supllies account.)
14 Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. S
excellent top-of-the-line food processor and mixer that orginally cost her $750. Natalie decides to sta
in her new business. She estimates that the equipment is currently worth $300. She invests the equ
business.
16 Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 ca
Natalie signs a note payable in the name of the business. Natalie deposits the money in the busines
(Hint: The note does not have to be repaid for 24 months. As a result, the note payable should be re
accounts as the last liability and also on the balance sheet as the last liability.)
17 She buys more baking equipment for $900 cash.
20 She teaches her first class and collects $125 cash.
25 Natalie books a second class for December 4 for $150. She receives $30 in advance as a downpaym
30 Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2017.

Instructions
(a) Prepare journal entries to record the November transactions.
(b) Post the journal entries to general ledger accounts.
(c ) Prepare a trial balance at November 30.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a

(a) Prepare journal entries to record the November transactions.

GENERAL JOURNAL J1
Date Account Titles and Explanation Debit Credit
Nov. 8 Account Title Value
Account Title Value

11 Account Title Value

Account Title Value

13 Account Title Value

 Account Title Value

14 Account Title Value

Account Title Value

16 Account Title Value

Account Title Value

17 Account Title Value

Account Title Value

20 Account Title Value

Account Title Value

25 Account Title Value

Account Title Value

30 Account Title Value

Account Title Value

(b) Post the journal entries to general ledger accounts.

Cash
Date Explanation Ref. Debit Credit

Nov. 8 Ref. Value

11 Ref. Value
13 Ref. Value
16 Ref. Value
17 Ref. Value
20 Ref. Value
25 Ref. Value
30 Ref. Value

Supplies
Date Explanation Ref. Debit Credit

Nov. 13 Ref. Value

 Prepaid Insurance
Date Explanation Ref. Debit Credit

Nov. 30 Ref. Value

Equipment
Date Explanation Ref. Debit Credit

Nov. 14 Ref. Value

17 Ref. Value

Unearned Service Revenue

Date Explanation Ref. Debit Credit

Nov. 25 Ref. Value

Notes Payable
Date Explanation Ref. Debit Credit

Nov. 16 Ref. Value

Owner's Capital
Date Explanation Ref. Debit Credit

Nov. 8 Ref. Value

14 Ref. Value

Service Revenue
Date Explanation Ref. Debit Credit

Nov 20 Ref. Value

Advertising Expense
Date Explanation Ref. Debit Credit

Nov. 11 Ref. Value

(c ) Prepare a trial balance at November 30.

COOKIE CREATIONS
Trial Balance
November 30, 2016
Account Debit Credit
Cash Value
Supplies Value
Prepaid Insurance Value
Equipment Value
Unearned Service Revenue Value
Notes Payable Value
Owner's Capital Value
Service Revenue Value
Advertising Expense Value
Totals ? ?

After you have completed the requirements of CC2, consider this additional question.
1. Assume that on November 8, Natalie transferred $800 cash to her business account and
on November 25, she received full payment of $150 for the December 4th class. Show the
impact of these changes on the journal entries, general ledger and the trial balance.
decides to operate "Cookie Creations" as a
ovember 2016, the following activities took

sits in her personal bank account.

s $500 from her personal account

for $125 cash.

ng the cookie classes. She has an

50. Natalie decides to start using it only
300. She invests the equipment in the

ther lends her $2,000 cash, for which

he money in the business bank account.
note payable should be reported in the

n advance as a downpayment.
mber 1, 2017.

a formula in cells with a "?" .

Balance

Value
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account and
ass. Show the