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.

Question Completion:

Prepare the corrected Trial Balance of Ricardo Company.

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

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

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c is the correct answer.