Adjusting entries from trial balances The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct. Identify the errors in the accountant’s adjusting entries, assuming that none of the accounts were affected by more than one adjusting entry.

Question

Still sussing out bartleby?

Answer 1

BuyFind

Financial And Managerial Accounting

15th Edition

WARREN + 1 other

Publisher: Cengage Learning,

ISBN: 9781337902663

Solutions

Chapter

Section

Answer 2

BuyFind

Financial And Managerial Accounting

15th Edition

WARREN + 1 other

Publisher: Cengage Learning,

ISBN: 9781337902663

Solutions

Chapter

Section

Answer 3

Solutions

Chapter

Section

Answer 4

Chapter

Section

Answer 5

To determine

Identify the errors in the accountant’s entries and prepare trial balance of Company LE as on May 31, 20Y9.

Explanation of Solution

Trial balance:

A trial balance is the summary of all the ledger accounts. The trial balance is prepared to check the total balance of the debit with the total of the balance of the credit column, which must be equal. The trial balance is usually prepared to check accuracy of ledger balances. In trial balance the debit balances are recorded in the left column, and credit balances are recorded in the right column.

The following items have errors in the accountant’s adjusting entries:

Laundry revenue
Laundry supplies
Insurance expenses
Accumulated Depreciation
Wages expense

In error -1, the accounts receivable was debited for $5,000 ($23,250 - $18,250) but the laundry revenue was not credited for the same amount. This understates the laundry revenue balance recorded in trial balance. Hence, it is to be adjusted for $5,000.

(1) Calculation of correct Laundry Revenue balance:

Correct Laundry Revenue} = (Laundry revenue in the trial balance) +( Diffrence between the adjusted and unadjusted accounts receivable)= ($182,100) + ($23,250 - $18,250)=$182,100+ $5,000=$187,100

In error -2, the laundry supplies expense, was credited for $3,000 instead of being debited for the same amount. Hence it should be adjusted for $3,000 in laundry supplies.

(2) Calculation of correct Laundry Supplies balance:

Correct Laundry Supplies} = ( Laundry supplies in the unadjusted trial balance) - (Laundry Supplies expense)= ($3,750) - ($3,000)= $750

In error-3, the prepaid insurance account was credited for $3,600($5,200 - $1,600)(3), but the insurance expense account was debited only for $600 instead of $3,600

Financial And Managerial Accounting

Solutions

Financial And Managerial Accounting

Explanation of Solution

Still sussing out bartleby?

The Solution to Your Study Problems

Chapter 3 Solutions

Additional Business Textbook Solutions