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

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

a. Allison recorded a $900 payment of rent by debiting Rent Expense for $90 and crediting Cash for $90.

b. In recording a $700 payment on account, Allison debited Accounts Receivable and credited Cash.

c. Allison recorded the receipt of cash for service revenue by debiting Cash for $230 instead of the correct amount of $320. Allison also credited Service Revenue for the

$230, the incorrect amount.

d. Allison posted a $190 purchase of supplies on account by debiting Accounts Payable and crediting Supplies.

e. In preparing the trial balance, Allison omitted a $95,000 note payable.

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

Account(s) Misstated Cash

$810 too high Rent Expense

$810 too low.

AppendixLO1