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
Accounts Receivable $41,800
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
Gasoline Expense $17500
CREDITS TOTAL $884250
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|
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.
3.) Now, we shall calculate the balance of retained earnings-
Tranfer to reatined earnings= 25600
Less Dividends adjusted from re...
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