For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal

For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.

a. The payment of cash for the purchase of office equipment of $12,900 was debited to Land for $12,900 and credited to Cash for $12,900.

b. The payment of $1,840 on account was debited to Accounts Payable for $184 and credited to Cash for $1,840.

c. The receipt of cash on account of $3,800 was recorded as a debit to Cash for $8,300 and a credit to Accounts Receivable for $3,800.

Answer:

a. The trial balance totals are equal because both the debit and credit entries were journalized and posted for $12,900.

b. The trial balance totals are unequal. The credit total is higher by $1,656 ($1,840 – $184).

c. The trial balance totals are unequal. The debit total is higher by $4,500 ($8,300 – $3,800).

Using the following data for Adventure Travel Service as well as the statement of owner’s equity shown in Practice Exercise

Using the following data for Adventure Travel Service as well as the statement of owner’s equity shown in Practice Exercise 1-5A, prepare a report form balance sheet as of April 30, 2019: 

Accounts payable $105,000

Accounts receivable 485,000

Cash 197,000

Land 900,000

Supplies 18,000

Answer:

ADVENTURE TRAVEL SERVICE

Balance Sheet

April 30, 2019

Cash$ 197,000 Accounts receivable485,000 Supplies18,000 Land900,000 Total assets$1,600,000 Accounts payable$ 105,000 Jerome Foley, capital1,495,000 Total liabilities and owner’s equity$1,600,000

Using the data presented in Exercise 8-18, journalize the entry or entries that should be made by the company.

Using the data presented in Exercise 8-18, journalize the entry or entries that should be made by the company.

Answer:

July 31 Cash540 Accounts Payable540 31 Miscellaneous Expense20 Cash20

The debits and credits for four related entries for a purchase of $40,000, terms 2/10, n/30, are presented in the following T accounts

The debits and credits for four related entries for a purchase of $40,000, terms 2/10, n/30, are presented in the following T accounts. Describe each transaction.

Cash

 | (2) 450

 | (4) 34,300

Accounts Payable

(3)  4,900 | (1) 39,200

(4) 34,300 |

Merchandise Inventory

(1) 39,200 | (3) 4,900

(2)    450 |

Answer:

(1) Purchased merchandise on account at a cost of $39,200, which is $40,000 less the 2% discount of $800.

(2) Paid freight, $450.

(3) An allowance or return of merchandise was granted by the creditor, $4,900,which is a $5,000 invoice amount less the 2% discount of $100.

(4) Paid the balance due within the discount period: debited Accounts Payable, $34,300, which is $39,200 less the return of $4,900.

The following errors occurred in posting from a two-column journal: 1. A credit of $6,000 to Accounts Payable was not posted.

The following errors occurred in posting from a two-column journal:

1. A credit of $6,000 to Accounts Payable was not posted.
2. An entry debiting Accounts Receivable and crediting Fees Earned for $5,300 was not posted.
3. A debit of $2,700 to Accounts Payable was posted as a credit.
4. A debit of $480 to Supplies was posted twice.
5. A debit of $3,600 to Cash was posted to Miscellaneous Expense.
6. A credit of $780 to Cash was posted as $870.
7. A debit of $12,620 to Wages Expense was posted as $12,260.

Considering each case individually (i.e., assuming that no other errors had occurred), indicate (a) by “yes” or “no” whether the trial balance would be out of balance; (b) if answer to (a) is “yes,” the amount by which the trial balance totals would differ; and (c) whether the Debit or Credit column of the trial balance would have the larger total. Answers should be presented in the following form, with error (1) given as an example:

           (a)        (b)        (c)
Error Out of Balance Difference Larger Total
1.         yes      $6,000       debit


Answer:

(a) (b)
Error Out of Balance Difference
1. yes $6,000
2. no —
3. yes 5,400
4. yes 480
5. no —
6. yes 90
7. yes 360
debit
debit
—
credit
credit

During February, $186,500 was paid to creditors on account, and purchases on account were $201,400. Assuming that the February 28 balance

a. During February, $186,500 was paid to creditors on account, and purchases on account were $201,400. Assuming that the February 28 balance of Accounts Payable was $59,900, determine the account balance on February 1.

b. On October 1, the accounts receivable account balance was $115,800. During October, $449,600 was collected from customers on account. Assuming that the October 31 balance was $130,770, determine the fees billed to customers on account during October.

c. On April 1, the cash account balance was $46,220. During April, cash receipts totaled $248,600 and the April 30 balance was $56,770. Determine the cash payments made during April.


Answer:

a.
X + $201,400 – $186,500 = $59,900
X = $59,900 + $186,500 – $201,400
X = $45,000
b.
Oct. 1 115,800 449,600
Oct. 31 130,770
$115,800 + X – $449,600 = $130,770
X = $130,770 + $449,600 – $115,800
X = $464,570
c.
Apr. 1 46,220X 
Apr. 30 56,770
$46,220 + $248,600 – X = $56,770
X = $46,220 + $248,600 – $56,770
X = $238,050

The following selected transactions were completed during August of the current year: 1. Billed customers for fees earned, $73,900.

The following selected transactions were completed during August of the current year:

1. Billed customers for fees earned, $73,900.

2. Purchased supplies on account, $1,960.

3. Received cash from customers on account, $62,770.

4. Paid creditors on account, $820.

a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted.

b. Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, place the appropriate number to identify the transactions.

c.  Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean that an error has occurred?


Answer:


a. (1) Accounts Receivable73,900
Fees Earned73,900
(2) Supplies1,960
Accounts Payable1,960
(3) Cash62,770
Accounts Receivable62,770
(4) Accounts Payable820
Cash820
b.
(3) 62,770     (4) 820            (4) 820            (2) 1,960         
(2) 1,960       (1) 73,900       
(1) 73,900     (3) 62,770       
c. No. An error may not have necessarily occurred. A credit balance 
in Accounts Receivable could occur if a customer overpaid his or 
her account. Regardless, the credit balance should be investigated to 
verify that an error has not occurred.