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Errors in
The following preliminary unadjusted trial balance of Ranger Co., a sports ticket agency, does not balance:
Ranger Co. Unadjusted Trial Balance August 31,2016 |
||
Debit Balances | Credit Balances | |
77,600 | ||
Accounts Receivable | 37,750 | |
Prepaid Insurance | 12,000 | |
Equipment | 1,000 | |
Accounts Payable | 29,100 | |
Unearned Rent | 10,800 | |
Common Stock | 40,000 | |
70,000 | ||
Dividends | 13,000 | |
Service Revenue | 385,000 | |
Wages Expense | 213,000 | |
Advertising Expense | 16,350 | |
Miscellaneous Expense | 18,400 | |
273,700 | 668,300 |
When the ledger and other records are reviewed, you discover the following: (1) the debits and credits in the cash account total $77,600 and $62,100, respectively; (2) a billing of $9,000 to a customer on account was not posted to the accounts receivable account; (3) a payment of $4,500 made to a creditor on account was not ) posted to the accounts payable account; (4) the balance of the unearned rent account is $5,400; (5) the correct balance of the equipment account is $190,000; and (6) each account has a normal balance.
Prepare a corrected unadjusted trial balance.
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Chapter 2 Solutions
EBK FINANCIAL & MANAGERIAL ACCOUNTING
- PROBLEM 1 (ERROR CORRECTION) Koshu Co., a calendar year entity, contained the following independent errors at the end of each reporting period: (Amounts in thousands) 2020 50 under 2019 40 under 12 under 68 under 25 under 2018 Accounts Payable Depreciation Expense Merchandise Inventory 20 over 16 under 33 over 45 under 97 over Accrued Income 33 over 56 under Unearned Income 14 under 85 over 27 over 45 under Advances to Suppliers 105 under Advances from Customers Accounts Receivable Accrued Expense Prepaid Expense 82 over 71 under 68 under 85 under 92 over 78 under 27 under 17 over 19 over 18 under 12 under Compute for the following: a. Net adjustments on 2018 and 2020 Profits b. Effects of errors on the 2019 and 2020 Accumulated Profits c. Net adjustments to 2018 and 2019 Working Capital d. Adjusted total 2018 and 2020 Total Assets assuming unadjusted balances of total assets of 2018 and 2020 were P890 and P920, respectively e. Effects of errors on 2018 and 2019 Total Liabilitiesarrow_forwardTech Support Services has the following unadjusted trial balance as of January 31, 2019: The debit and credit totals are not equal as a result of the following errors: a. The cash entered on the trial balance was overstated by 8,000. b. A cash receipt of 4,100 was posted as a debit to Cash of 1,400. c. A debit of 12,350 to Accounts Receivable was not posted. d. A return of 235 of defective supplies was erroneously posted as a 325 credit to Supplies. e. An insurance policy acquired at a cost of 3,000 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was overstated by 21,000. g. A credit of 3,450 in Accounts Payable was overlooked when the balance of the account was determined. h. A debit of 6,000 for a withdrawal by the owner was posted as a debit to Thad Engelberg, Capital. i. The balance of 28,350 in Advertising Expense was entered as 23,850 in the trial balance. j. Miscellaneous Expense, with a balance of 4,600, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of January 31, 2019. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.arrow_forwardUsing the data in Exercise 9-11, assume that the allowance for doubtful accounts for Selbys Bike Co. had a debit balance of 7,200 as of December 31, 2016. Journalize the adjusting entry for uncollectible accounts as of December 31, 2016. Journalize the adjusting entry for uncollectible accounts as of December 31, 2016. Selbys Bike Co. is a wholesaler of motorcycle supplies. An aging of the companys accounts receivable on December 31, 2016, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows: Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2016.arrow_forward
- Write-Off of Uncollectible Accounts King Enterprises had 27 customers utilizing its financial planning services in 2019. Each customer paid King $25,000 for receiving Kings assistance. King estimates that 2% of its $675,000 credit sales in 2019 will be uncollectible. During 2020, King wrote off $2,700 related to services performed in 2019. Required: 1. Prepare the journal entry to record the defaulted balance. 2. Prepare the adjusting entry to record the bad debt expense for 2019.arrow_forwardplease answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image) On December 31, a company has outstanding accounts receivable of $69,000, and it estimates that 3% of its receivables will be uncollectible. Prepare the adjusting journal entry at year-end to record bad debts expense if the Allowance for Doubtful Accounts has a: $1,173 credit balance before the adjustment. $345 debit balance before the adjustment.arrow_forwardThe trial balance of Sam s Deli Inc. at October 31, 2014, does not balance: The accounting records contain the following errors: a. Recorded a $1,000 cash revenue transaction by debiting Accounts Receivable. The credit entry was correct. b. Posted a $1,000 credit to Accounts Payable as $100. c. Did not record utility expense or the related account payable in the amount of $200. d. Understated Share Capital by $1,100. e. Omitted insurance expense of $1,000 from the trial balance. Requirement Prepare the correct trial balance at October 31, 2014, complete with a heading. Journal entries are not required.arrow_forward
- Hotel California Ltd Trial Balance at 30 September 20X7 included: Debit $ 90,350 Credit $ Receivables ledger control account Allowance for doubtful debts brought forward The following information is also available: (1) No entries have been made in respect of cash of $1,320 received from Marylyn Ltd whose balance had been written off last year, and 2,490 2) At 30 September 20X7 an irrecoverable balance of $1,950 is to be written off and the receivable allowance is to be adjusted to 1.5% of the remaining balance Required: Calculate the figure that will be reported in the statement of financial position at 30 September 20X7 for receivables.arrow_forwardOn June 30, the balances in the General Ledger accounts of Easy Company resulted in the following totals: Assets P517,600 Liabilities 323,400 Equity 200,500 Total assets do not equal total liabilities plus equity because the following errors were made: Supplies of P500 were on hand but were not included in assets because all purchases were debited to Supplies Expense. Credit services revenue of P15,700 were posted to the Services Revenue account as P17,500. The Accounts Receivable account was posted correctly. Equipment purchased on credit for P51,600 was incorrectly posted to Notes Payable as P56,100. No error was made in the Equipment account. The correct balance of equity should be?arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 640,000 Credit sales $ 1,600,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 480,000 debit Allowance for doubtful accounts $ 5,800 debit Required:1. Prepare the adjusting entry to record bad debts under each separate assumption. Bad debts are estimated to be 2% of credit sales. Bad debts are estimated to be 1% of total sales. An aging analysis estimates that 6% of year-end accounts receivable are uncollectible.arrow_forward
- The following summarizes the aging of accounts receivable for Orange Incorporated as of July 31, Year 1: Number of Days Unpaid Not yet due 1 to 30 days past due 31 to 60 days past due Over 60 days past due Total Accounts Receivable 11.130 $ 175,982 89,200 53,600 31,800 Historical % Uncollectible 17,424 margin of error +/-3 www. 29 12% 18% The unadjusted balance of the Allowance for Doubtful Accounts of Orange Incorporated is a credit balance in the amount of $17.578 on July 31, Year 1. What is the amount of the adjusting entry to be recorded on July 31 Year 17 35%arrow_forwardQuestion Description SABRINA CORPORATION UNADJUSTED TRIAL BALANCE DECEMBER 31, 2019 DEBIT CREDIT CASH 36,868 FV-NI Short Term INVESTMENTS 30,300 ACCOUNTS RECEIVABLE 425,755 ALLOWANCE FOR DOUBTFUL ACCOUNTS 8,400 INVENTORY 402,912 NOTES RECEIVABLE 30,000 OFFICE BUILDING 500,000 ACCUMULATED DEPRECIATION (OFFICE BUILDING) 280,000 OFFICE EQUIPMENT 120,000 ACCUMULATED DEPRECIATION (OFFICE EQUIPMENT) 0 ACCOUNTS PAYABLE 205,258 DIVIDENDS PAYABLE 7,328 NOTES PAYABLE 60,000 PREFERRED STOCK, 30,000 OUTSTANDING ON DECEMBER 31, 2019 100,000 COMMON STOCK, 100,000 OUTSTANDING ON DEC 31, 2019 185,000 RETAINED EARNINGS 280,623 SALES REVENUE 3,590,524 SALES…arrow_forwardThe unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts: Accounts receivable Allowance for Doubtful Accounts 1,330 Net Sales $443,000 Debit Credit 2,180,000 Credit All sales are made on credit. Based on past experience, the company estimates 4.0% of ending accounts receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense? Debit Bad Debts Expense $18,720; credit Allowance for Doubtful Accounts $18,720. Debit Bad Debts Expense $19,050; credit Allowance for Doubtful Accounts $19,050. Debit Bad Debts Expense $17,720; credit Allowance for Doubtful Accounts $17,720. Debit Bad Debts Expense $16,390; credit Allowance for Doubtful Accounts $16,390. O Debit Bad Debts Expense $8,720; credit Allowance for Doubtful Accounts $8,720.arrow_forward
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