COLLEGE ACCOUNTING (LL)W/ACCESS>CUSTOM<
4th Edition
ISBN: 9781260255157
Author: Haddock
Publisher: MCG CUSTOM
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Chapter 3, Problem 5CSR
To determine
Determine the actions in order to evaluate errors.
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Jetson Corp. performed services for a customer worth $500 and the customer will pay for those services next month.
When the transaction was journalized, however, Jetson's accountant debited the "Cash" account and credited the "Service Revenue" account for $500 each.
Question: As a result of this error, which of the following statements is/are true? (check all that apply)
Select one or more:
a.
Total debits and total credits will still equal but the balance sheet equation will not be satisfied.
b.
Total debits and total credits will still equal and the balance sheet equation will be satisfied.
c.
The "Accounts Receivable" account balance will be too low (understated) while the "Cash" account balance will be too high (overstated).
d.
The "Accounts Receivable" account balance will be too low (understated) while the "Service Revenue" account balance will be too high (overstated).
An employee working on her first trial balance discovers that the Equipment account has a credit balance of $2500 and a customer's A/R account has a credit balance of $25.
Based on the knowledge you have gained in this course and how account balances are recorded and increase/decrease, has the accountant made a mistake in her records or are these situations possible?
I have to do my accounting problems on excel and I have to record the transactions, but have a total for each column. If someone bought a computer from wardens office outfitters, $1,636, paying $750 in cash and placing the balance on account what does that mean exactly? I have other questions to but I'm not sure how this works.
Chapter 3 Solutions
COLLEGE ACCOUNTING (LL)W/ACCESS>CUSTOM<
Ch. 3 - Increases are recorded on which side of asset,...Ch. 3 - What is a footing?Ch. 3 - Prob. 1.3SRQCh. 3 - Prob. 1.4SRECh. 3 - Prob. 1.5SRECh. 3 - Prob. 1.6SRACh. 3 - Prob. 2.1SRQCh. 3 - Prob. 2.2SRQCh. 3 - What is a trial balance and what is its purpose?Ch. 3 - Prob. 2.4SRE
Ch. 3 - Prob. 2.5SRECh. 3 - Prob. 2.6SRACh. 3 - Prob. 1CSRCh. 3 - Prob. 2CSRCh. 3 - Prob. 3CSRCh. 3 - On which side of asset, liability, and owners...Ch. 3 - Prob. 5CSRCh. 3 - Prob. 1DQCh. 3 - Prob. 2DQCh. 3 - Prob. 3DQCh. 3 - Prob. 4DQCh. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - Indicate whether each of the following types of...Ch. 3 - The terms debit and credit are often used in...Ch. 3 - Why is Prepaid Rent considered an asset account?Ch. 3 - Why is the modern system of accounting usually...Ch. 3 - Prob. 11DQCh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Preparing a chart of accounts. The accounts that...Ch. 3 - Prob. 1PACh. 3 - Prob. 2PACh. 3 - Prob. 3PACh. 3 - Prob. 4PACh. 3 - The accountant for the firm owned by Randy Guttery...Ch. 3 - Prob. 1PBCh. 3 - Prob. 2PBCh. 3 - The following transactions took place at...Ch. 3 - Prob. 4PBCh. 3 - Prob. 5PBCh. 3 - Prob. 1CTPCh. 3 - Prob. 2CTPCh. 3 - In discussing a firms latest financial statements,...Ch. 3 - Prob. 2MFCh. 3 - Prob. 3MFCh. 3 - Prob. 4MFCh. 3 - Prob. 1EDCh. 3 - Prob. 1FSA
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- What Would You Say? A fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for 7,000, paid 3,000 in cash, and placed the remainder on account. This means that there are two credits and one debitone debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.arrow_forwardA fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for 15,000, paid 5,000 in cash, and placed the remainder on account. This means that there are two credits and one debitone debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.arrow_forwardDelia Alvarez, owner of Delias Lawn Service, wants to borrow money to buy new lawn equipment. A local bank has asked for financial statements. Alvarez has asked you to prepare financial statements for the year ended December 31, 20--. You have been given the unadjusted trial balance on page 175 and suspect that Alvarez expects you to base your statements on this information. You are concerned, however, that some of the account balances may need to be adjusted. Write a memo to Alvarez explaining what additional information you need before you can prepare the financial statements. Alvarez is not familiar with accounting issues. Therefore, explain in your memo why you need this information, the potential impact of this information on the financial statements, and the importance of making these adjustments before approaching the bank for a loan.arrow_forward
- Damon Davis was working on a spreadsheet for the Drano Plumbing Company. He calculated that the net profit would be $50,000. He totaled the columns on the Balance Sheet as follows: debit, $400,000; and credit, $300,000. What was the most likely cause of this disparity? If this was not the case, how should he go about determining the cause of the error?arrow_forwardDuring the adjusting process, the receptionist miscounted the office supplies in the closet. She thought there were $550 worth of supplies left, but there are only $300. What is the effect of this error on the financial statements? What specific accounts are being effected? Which financial statements are incorrect? How will net income be effected? Draw T accounts if it will help you think this through. Thank you in advance!!arrow_forwardDuring the adjusting process, the receptionist miscounted the office supplies in the closet. She thought there were $750 worth of supplies left, but there are only $500. What is the effect of this error on the financial statements? What specific accounts are being effected? Which financial statements are incorrect? How will net income be effected? Draw T accounts if it will help you think this through.arrow_forward
- 29) During the month of April 2018, the business paid cash of RO 15,500 to John mart, but it is wrongly debited to the account of Jack mart. As an accountant, what is the rectified entry would you write to correct this error? a. Jack mart RO 15,500 Dr / John mart RO 15,500 Cr b. John mart RO15,500 Dr / Jack mart RO 15,500 Cr c. Jack mart RO 15,500 Dr / Account payable RO 15,500 Cr d. John mart RO 15,500 Dr / Account payable RO 15,500 Crarrow_forwardThe Income Statement columns in the end-of-period spreadsheet show that debits are equal to $55,800 and credits are $77,520. What does this information mean to the accountant? a.There is a net loss of $21,720. b.The accounts are out of balance, indicating that an error has been made. c.The accounts have not been updated. d.There is a net income of $21,720.arrow_forwardDamon Davis was doing the paperwork for Drano Plumbing. He estimated a net profit of $50,000. He discovered that the debit column on the balance sheet totaled $400,000 and the credit column, $300,000, when he added up the columns. What was the difference in the results' most likely cause? What should he do if this wasn't the root of the problem? How can he find out where it came from?arrow_forward
- Your friend has come to you for advice on how to record a transaction in their accounting records for their proprietorship. 1) Use what you have learned in Chapter 4 to explain what is done at each step up to preparing the trial balance. 2) How would you go about detecting the error(s) if a trial balance resulted in total debits of $23,500 and total credits of $22,700arrow_forwardThe Income Statement columns in the end-of-period spreadsheet show that debits are equal to $28,670 and credits are $67,915. What does this information mean to the accountant? a.net income of $39,245 b.the accounts are out of balance, indicating an error has been made c.net loss of $39,245 d.the accounts have not been updatedarrow_forwardF Co has certain invoices, amounting to $100, which have been outstanding for more than two months. Explain, how they affected financial statementAnswer the question and explain why did you choose this answerarrow_forward
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