Need help with this assignment!

Mastery Problem: Analyzing Transactions

KL Company Inc.

In February, Katie Long formed KL Company Inc. Transactions for the month of March have been posted to the T accounts. An intern has prepared a trial balance from the T accounts, but there seem to be some errors.

T accounts

Cash

Bal. 8,000 3/3 2,300

3/25 7,725 3/27 1,275

3/28 4,500 3/29 3,375

3/30 8,125 3/31 1,900

Accounts Receivable

Bal. 1,950 _____. _____.

3/18 9,950 3/30 8,125

Supplies

Bal. 225 ____. ____.

3/7 1,450. ____. ____.

Office Equipment

3/2. 18,500 ___. ____.

Accounts Payable

3/27. 1,275 Bal. 1,250

____. ____. 3/7 1,450

Notes Payable

____. ____. 3/2 18,500

Common Stock

____. ____. Bal. 7,500

____. ____. 3/28 4,500

Retained Earnings

____. ____. Bal. 1,425

Dividends

3/31. 1,900 ____. _____.

Fees Earned

____. ____. 3/18 9,950

____. ____. 3/25 7,725

Rent Expense

3/3. 2,300 ____. ____.

Wages Expense

3/29. 3,375 ____. ____.

Required:

Transactions

Descriptions of the transactions for the month of March are provided in the following table. Each of the transactions that follow has been posted to the T accounts. Referring to the T accounts, select the date on which each transaction occurred, enter the amount of the transaction, and select the account to debit and credit.

Transaction Date Amount Debit Credit

Purchased equipment, _____. $ ____. ____.

giving a

note payable for the

purchase price.

Paid rent for April. ____. $ ____. ____.

Purchased supplies on account. ____. $ ____. ___.

Recorded fees earned on account. _____. $ ____. _____

Received cash for fees earned. ____. $ _____. _____.

Paid creditors on account. _____. $ _____. _____.

KL Company Inc. issued additional shares of common stock in exchange for cash. _____. $ _____. ______.

Paid wages. _____. $. _____. _____.

Received cash from customers on account. _____. $ _____. ______.

KL Company Inc. paid dividends to its stockholders _____. $ _______. _______.

Trial Balance: Unequal Totals

The intern has prepared the following trial balance for the month of March.

KL Company Inc.

Unadjusted Trial Balance

March 31, 2013

Account Title Debit Balances Credit Balances

Cash 24,100

Accounts Receivable 3,775

Supplies 1,675

Office Equipment 18,500

Accounts Payable 1,425

Notes Payable 18,500

Common Stock 12,000

Retained Earnings 1,425

Dividends 1,900

Fees Earned 9,950

Rent Expense 3,200

Wages Expense 3,375

50,325

49,500

1. Trial Balance: Correct

The Trial Balance: Unequal Totals was prepared by the intern. The intern is puzzled by the unequal totals. Prepare a corrected trial balance. If an amount box does not require an entry, leave it blank.

KL Company Inc. Unadjusted Trial Balance March 31, 20Y3
Account Title	Debit Balances	Credit Balances
Cash
Accounts Receivable
Supplies
Office Equipment
Accounts Payable
Notes Payable
Common Stock
Retained Earnings
Dividends
Fees Earned
Rent Expense
Wages Expense

Feedback

Errors on Trial Balance

Compare the trial balance prepared by the intern (Trial Balance: Unequal Totals) to the trial balance that you prepared (Trial Balance: Correct). In the following table, select the accounts for each type of error. Not all accounts contain errors.

Error Type

Cash

Accounts Receivable

Supplies

Office Equipment

Accounts Payable

Notes Payable

Common Stock

Retained Earnings

Dividends

Fees Earned

Rent Expense

Wages Expense

Transposition

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Incorrectly reported as a debit

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Incorrectly reported as a credit

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Balance computed incorrectly

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Feedback

Accounting Equation

The intern is puzzled and asks "Are you sure the accounting equation is still in balance?" Using the corrected trial balance you prepared, prove that the accounting equation is in balance.

The resources owned by a business.Assets	=	The rights of creditors that represent debts of the business.Liabilities	+	The owners' equity in a corporation.Stockholders' Equity
$	=	$	+	$

Still puzzled, the intern asks "Why do none of the amounts in the accounting equation equal the totals on the trial balance?"

a.	The accounts with debit balances are not all classified in the same element of the accounting equation. For example, not all accounts with debit balances are assets.
b.	This is because the revenue and expense accounts are part of the stockholders equity element. The accounts with debit balances should be part of the total assets.
c.	You point out the total of the assets, liabilities and stockholders equity is equal to the sum of the debit and credit totals on the trial balance.
d.	The accounts with credit balances are not all classified in the same element of the accounting equation. For example, not all accounts with credit balances are liabilities.
e.	The accounts that make up the total for stockholders equity have a mix of debit and credit balances.