James Cyr has trouble keeping his debits and credits equal. During a recent month, James made the
Question:
James Cyr has trouble keeping his debits and credits equal. During a recent month, James made the following errors:
a. James recorded a $750 payment of rent by debiting Rent Expense for $75 and crediting Cash for $75.
b. In recording a $300 payment on account, James debited Accounts Receivable and credited Cash.
c. James recorded the receipt of cash for service revenue by debiting Cash for $320 instead of the correct amount of $230. James also credited Service Revenue for $320, the incorrect amount.
d. James posted a $225 purchase of supplies on account by debiting Accounts Payable and crediting Supplies.
e. In preparing the trial balance, James omitted a $30,000 note payable.
Requirements
1. For each of these errors, state whether James' mistake would cause the total debits and total credits on the trial balance to be unequal.
2. Identify each account with an incorrect balance, and indicate the amount and direction of the error.
Effect on Trial Balance _____________ Account(s) Misstated
Total debits = Total credits ..................... Cash
............................................. $675 too high
............................................. Rent Expense
.............................................. $675 too low
Accounts PayableAccounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Effect on Trial Balance Accounts Misstated a Total debits Total credits Cash 675 too ...View the full answer
