End of Chapter Problem 3.27 PDF

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2/8/2021

End of Chapter Problem 3.27

Print by: Mobin Rahman 200973_2020_spr: 200973 (Spring 2020) Techniques in Financial Accounting / Topic 3 Homework: Reconstruction of Accounts and Error Correction

*End of Chapter Problem 3.27 Your first assignment on your new job was to determine why the 31 December 2018 trial balance did not balance. In your review of the records you uncovered a number of errors described below. 1. The sundry expense account with a balance of $247 was omitted from the trial balance. A payment of $740 on the electricity account payable was not posted to the electricity account payable account, but was posted correctly to the cash at bank account.

2.

3. A $2,599 debit to cash at bank was posted as $2,959. 4.

A $366 credit was credited to the accounts receivable account but should have been made to the services revenue account instead.

5.

A cash receipt of $490 from customers in settlement of their accounts was posted twice to the cash at bank account and the accounts receivable account.

6. The accounts payable account balance of $36,700 was listed in the trial balance as $37,600. A $2,520 credit to services revenue was posted as a $252 credit. The debit to cash at bank was for the correct amount.

7.

8. A purchase of office supplies for $357 on credit was not recorded. A purchase of a delivery truck for $126,000 using a loan was posted as a debit to the loan payable account and a debit to the equipment account.

9.

10. The drawings account balance of $15,800 was listed as a credit balance in the trial balance. 11.

A $1,280 payment to employees for their weekly salaries was credited to cash at bank only once but was posted twice to the wages expense account.

*a. Your answer is correct. Indicate in the table below how each error would affect the trial balance totals. If the error does not cause the trial balance to be out of balance and you select ‘no’ in the second column, write ‘Equal’ in the ‘Difference between trial balance totals’ column. Difference Would the error cause between trial Column having the trial balance to be balance totals ($) largest total out of balance? Error 1.

Yes

247

Credit

2.

Yes

740

Credit

3.

Yes

360

Debit

4.

No

Equal

Equal

5.

No

Equal

Equal

6.

Yes

900

Credit

7.

Yes

2268

Debit

8.

No

Equal

Equal

9.

Yes

252000

Debit

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End of Chapter Problem 3.27

10.

Yes

15800

Credit

11.

Yes

1280

Debit Attempts: 2 of 3 used

*b. Your answer is correct. Prepare the journal entries necessary to correct errors number 4, 5 and 8. (Enter debit entries first, followed by credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Error Particulars 4. Accounts receivable

Debit Credit 366

Services revenue

366

(To correct error) 5. Accounts receivable

490

Cash at bank

490

(To correct error) 8. Supplies Accounts payable

357 357

(To correct error) Attempts: 1 of 3 used

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