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Effect of errors on trial balance Indicate which of the following errors, each considered individually, would cause the trial balance totals to be unequal: A. A fee of $21,000 earned and due from a client was not debited to Accounts Receivable or credited to a revenue account, because the cash had not been received. B. A receipt of $11,300 from an account receivable was journalized and posted as a debit of $11,300 to Cash and a credit of $11,300 to Fees Earned. C. A payment of $4,950 to a creditor was posted as a debit of $4,950 to Accounts Payable and a debit of $4,950 to Cash. D. A payment of $5,000 for equipment purchased was posted as a debit of $500 to Equipment and a credit of $500 to Cash. E. Payment of cash dividends of $19,000 was journalized and posted as a debit of $1,900 to Salary Expense and a credit of $19,000 to Cash. Indicate which of the preceding errors would require a correcting entry.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 2, Problem 17E
Textbook Problem
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Effect of errors on trial balance

Indicate which of the following errors, each considered individually, would cause the trial balance totals to be unequal:

  1. A. A fee of $21,000 earned and due from a client was not debited to Accounts Receivable or credited to a revenue account, because the cash had not been received.
  2. B. A receipt of $11,300 from an account receivable was journalized and posted as a debit of $11,300 to Cash and a credit of $11,300 to Fees Earned.
  3. C. A payment of $4,950 to a creditor was posted as a debit of $4,950 to Accounts Payable and a debit of $4,950 to Cash.
  4. D. A payment of $5,000 for equipment purchased was posted as a debit of $500 to Equipment and a credit of $500 to Cash.
  5. E. Payment of cash dividends of $19,000 was journalized and posted as a debit of $1,900 to Salary Expense and a credit of $19,000 to Cash.

Indicate which of the preceding errors would require a correcting entry.

To determine

Indicate whether each of the following error would cause the trial balance totals to be unequal, and the error which would require a correcting entry.

Explanation of Solution

Errors not affecting trial balance:

An error is a mistake committed in the process of book-keeping or in accounting.  In some cases, errors may occur but, they will not affect the totals of the trial balance. Such an error can be found while preparing the trial balance or would be indicated by the unusual account balance. For Example, Crediting land account. If such errors have already been journalized, and posted to the ledger, then they should be corrected by preparing a correcting journal entry.

a.

As a fee of $21,000 earned, and due from a client was not debited either to Accounts receivable account, or credited to a revenue account, it would not cause the trial balance totals to be unequal. This error would not require any correcting entry but they should be entered in the journal book.

b.

As a receipt from the accounts receivable account of $11,300 was debited to cash account, and wrongly credited to fees earned account instead of accounts receivable account, it should require a correcting entry to rectify such error...

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Chapter 2 Solutions

Financial And Managerial Accounting
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