Parrish Ch. 4 Pg. 95 4-1(Analysis of Period-end Measurements and Adjusting Process)Correcting The Trial Balance:  DEBITS AND CREDITS ARE NOT EQUALPlease show me the correct answer to the following problem on the trial balance sheet and how you came to the answer.ACCOUNTS LISTED UNDER DEBIT Cash $470550Accounts Receivable $41,800Land $170000Building $170000Trucks $232000Accumulated Depreciation $100000Mortgage Payable $298,00Moving Service Revenue $78000Salaries Expense $30650Repairs Expense $1250Interest Expense $3000TOTAL FOR DEBITS: $1785250ACCOUNTS LISTED UNDER CREDITSAccounts Payable $50750Dividends Payable $8000Common Stock $800000Dividends $8000Gasoline Expense $17500CREDITS TOTAL $884250

Question
Asked Nov 25, 2019
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Parrish Ch. 4 Pg. 95 4-1

(Analysis of Period-end Measurements and Adjusting Process)

Correcting The Trial Balance:  DEBITS AND CREDITS ARE NOT EQUAL

Please show me the correct answer to the following problem on the trial balance sheet and how you came to the answer.

ACCOUNTS LISTED UNDER DEBIT 

Cash $470550

Accounts Receivable $41,800

Land $170000

Building $170000

Trucks $232000

Accumulated Depreciation $100000

Mortgage Payable $298,00

Moving Service Revenue $78000

Salaries Expense $30650

Repairs Expense $1250

Interest Expense $3000

TOTAL FOR DEBITS: $1785250

ACCOUNTS LISTED UNDER CREDITS

Accounts Payable $50750

Dividends Payable $8000

Common Stock $800000

Dividends $8000

Gasoline Expense $17500

CREDITS TOTAL $884250

 

 

 

 

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Expert Answer

Step 1

Kindly note : As per the question attached,  'TOTAL FOR DEBITS is mentioned as $ 1785250

But, when we actually total up all the values attached in the question for debit side, the total comes at $ 1327050. 

Therefore, either an item has been missed while pasting the question or some values have been entered incorrectly. Please check the same.

Here, we have solved the question as per the items / values given in the question. Pls note this is the reason for debit and credit balance in the trial balance not matching in the answer. Otherwise all concepts have been applied as required. Thanks

 

1.) Let us first prepare the correct trial balance. Please see attached (as per the info provided in the question)

The following items have been reclassified to correct side as per their nature-

Accumulated depreciation- This has a credit balance and hence placed on credit side of trial balance
Mortgage payable- This is a liabilty and hence placed on credit side of TB
Moving service revenue- This is the income/revenue and placed on credit side of trial balance
Dividends- this is the dividend expense, hence being an expense placed on debit of TB
Gasoline expense- Again, this being an expense has been placed on debit side of Trial balance
Trial balance for the period ending
Amnt in $
Debit
470550
41800
170000
170000
232000
Particulars
Credit
Cash
A/c receivables
Land
Building
Truck
100000
Accumulated depreciation
Mortgage payable
Moving service revenue
Salaries expense
Repairs expense
Interest expense
Accounts payable
Dividend payable
Dividends
Gasoline expense
29800
78000
30650
1250
3000
50750
8000
8000
17500
800000
Common stock
1144750 1066550
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Trial balance for the period ending Amnt in $ Debit 470550 41800 170000 170000 232000 Particulars Credit Cash A/c receivables Land Building Truck 100000 Accumulated depreciation Mortgage payable Moving service revenue Salaries expense Repairs expense Interest expense Accounts payable Dividend payable Dividends Gasoline expense 29800 78000 30650 1250 3000 50750 8000 8000 17500 800000 Common stock 1144750 1066550

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Step 2

2.) We can now post adjusting entries and move the expenses and revenue to Income summary account.

Please find attached the journals for the same. 

Amnt in $
Credit
Particulars
Debit
Debit Income summary
Credit Salaries expense
Credit Repairs expense
Credit Interest expense
Credit Gasoline expense
52400
30650
1250
3000
17500
(recording closure of all
expenses to income summary)
Debit Moving service revenue
Credit Income summary
78000
78000
(recording closure of revenue
to income summary)
Debit income summary
Credit Retained earnings
25600
25600
(closing income summary
account & transferring balance
to Retained earnings
Debit retained earnings
8000
Credit dividend account
8000
(Recording dividend expense
against retained earnings)
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Amnt in $ Credit Particulars Debit Debit Income summary Credit Salaries expense Credit Repairs expense Credit Interest expense Credit Gasoline expense 52400 30650 1250 3000 17500 (recording closure of all expenses to income summary) Debit Moving service revenue Credit Income summary 78000 78000 (recording closure of revenue to income summary) Debit income summary Credit Retained earnings 25600 25600 (closing income summary account & transferring balance to Retained earnings Debit retained earnings 8000 Credit dividend account 8000 (Recording dividend expense against retained earnings)

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Step 3

3.) Now, we shall calculate the balance of retained earnings- 

Tranfer to reatined earnings= 25600

Less Dividends adjusted from re...

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