Error correction (Learning Objective 4) 20–25 min.

Allie Murphy has trouble keeping her debits and credits equal. During a recent month, Allie made the following errors:

a. Allie recorded a $450 payment of rent by debiting rent expense for $45 and crediting Cash for $45.

b. In recording an $800 payment on account, Allie debited Accounts Receivable and credited Cash.

c. Allie recorded the receipt of cash for service revenue by debiting Cash for $640 instead of the correct amount of $460. Allie also credited Service Revenue for $640, the incorrect amount.

d. Allie recorded a $275 purchase of supplies on account by debiting Accounts Payable and crediting Supplies.

e. In preparing the trial balance, Allie omitted a $30,000 note payable.

Requirements 1. For each of these errors, state whether Allie’s 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.

Use the following format:AppendixLO1

Transcribed Image Text:

Effect on Trial Balance Total debits = Total credits Account(s) Misstated Cash $405 too high Rent Expense $405 too low