The following are account balances for the medical practice of Pierre Laswai,MD, for October 2016.Cuea/ACD/EXM/JANUARY – APRIL 2019/ACCOUNTING AND FINANCE Page 1ISO 9001:2008 Certified by the Kenya Bureau of StandardsP.O. Box 6215700200 Nairobi - KENYATelephone: 891601-6Fax: 254-20-891084A. M. E. C. E. ACapital 30,000Accounts payable 6,000Equipment 29,000Service revenue 23,000Drawings 6,000Insurance expense 3,500Cash 11,000Utilities expense 700Supplies 2,800Salaries and wages expense 9,000Accounts receivable 10,000Rent expense 2,000Required:Prepare the trial balance as at October 31, 2016. (7 marks)
Question
The following are account balances for the medical practice of Pierre Laswai,MD, for October 2016.Cuea/ACD/EXM/JANUARY – APRIL 2019/ACCOUNTING AND FINANCE Page 1ISO 9001:2008 Certified by the Kenya Bureau of StandardsP.O. Box 6215700200 Nairobi - KENYATelephone: 891601-6Fax: 254-20-891084A. M. E. C. E. ACapital 30,000Accounts payable 6,000Equipment 29,000Service revenue 23,000Drawings 6,000Insurance expense 3,500Cash 11,000Utilities expense 700Supplies 2,800Salaries and wages expense 9,000Accounts receivable 10,000Rent expense 2,000Required:Prepare the trial balance as at October 31, 2016. (7 marks)
Solution 1
To prepare the trial balance as at October 31, 2016, you need to list all the accounts and their balances. The trial balance is a two-column list with debits on the left and credits on the right. Here's how you can prepare it:
Debit Side: Equipment: 29,000 Drawings: 6,000 Insurance Expense: 3,500 Cash: 11,000 Utilities Expense: 700 Supplies: 2,800 Salaries and Wages Expense: 9,000 Accounts Receivable: 10,000 Rent Expense: 2,000 Total Debits: 74,000
Credit Side: Capital: 30,000 Accounts Payable: 6,000 Service Revenue: 23,000 Total Credits: 59,000
The difference between the total debits and total credits is 15,000 (74,000 - 59,000). This difference should be added to the credit side to balance the trial balance. So, the final trial balance would look like this:
Debit Side: Equipment: 29,000 Drawings: 6,000 Insurance Expense: 3,500 Cash: 11,000 Utilities Expense: 700 Supplies: 2,800 Salaries and Wages Expense: 9,000 Accounts Receivable: 10,000 Rent Expense: 2,000 Total Debits: 74,000
Credit Side: Capital: 30,000 Accounts Payable: 6,000 Service Revenue: 23,000 Balance (Difference): 15,000 Total Credits: 74,000
Now, the total debits equal the total credits, and the trial balance is balanced.
Solution 2
To prepare the trial balance as at October 31, 2016, you need to list all the accounts and their balances. The trial balance is a two-column list, with debits on the left and credits on the right. Here's how you would prepare it:
Debit Side: Equipment: 29,000 Cash: 11,000 Supplies: 2,800 Accounts Receivable: 10,000 Drawings: 6,000 Insurance Expense: 3,500 Utilities Expense: 700 Salaries and Wages Expense: 9,000 Rent Expense: 2,000 Total Debits: 74,000
Credit Side: Capital: 30,000 Accounts Payable: 6,000 Service Revenue: 23,000 Total Credits: 59,000
The difference between the total debits and total credits is 15,000 (74,000 - 59,000). This difference should be added to the credit side to balance the trial balance. So, the adjusted trial balance would be:
Debit Side: 74,000 Credit Side: 74,000
Please note that in a real-world scenario, the trial balance should always balance (i.e., total debits should equal total credits) before any adjustments. If it doesn't, it indicates that there may be errors in the ledger accounts.
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