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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 2-54 Effect of Errors on a Trial Balance

The bookkeeper for Riley Inc. made the following errors:

  1. A cash purchase of supplies of $348 was recorded as a debit to Supplies for $384 and a credit to Cash of $384.
  2. A cash sale 0133.128 was recorded as a debit to Cash of $3,128 and a credit to Sales of $53,182.
  3. A purchase of equipment was recorded once in the journal and posted twice to the ledger.
  4. Cash paid for salaries of $5,270 was recorded as a debit to Salaries Expense of $5,270 and a credit to Accounts Payable of $5,210.
  5. A credit sale of $1600 was recorded as a credit In Sales Revenue of $1,1500; however the debit posting to Accounts Receivable was unfilled.

Required:

Indicate whether or not the trial balance will balance after the error. If the trial balance will not

Balance indicate the direction of the misstatement for any effected account (such as Cash will be overstated by $50).

To determine

Trial Balance:

A trial balance consist the balance of all the ledger account prepared during accounting period. The total balance of debit and credit on trial balance must equal but that does not mean the trial is accurate and free of error.

Indicate whether the trial balance will balance or not after the error. If it does not balance, indicate the direction of the misstatement for any effected account.

Explanation

a. Since both accounts are recorded with the same wrong amount, the trial balance will balance. But both supplies and cash account will be overstated by $36.

b. Although the cash account recorded with the correct amount, the sales account is overstated with $54. The difference between the correct amount and error amount will be the overstated amount of cash.

c. The transaction is posted twice which means that both accounts are overstated with same amount...

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