first year co-op student working for UR Here.com recorded the transactions for the month. He wasn’t exactly sure how to journalize and post, but he did the best he could. He had a few questions, however, about the following transactions. 1. Cash received from a customer on account was recorded as a debit to Cash of $560 and a credit to Accounts Receivable of $650, instead of $560. 2. A service provided for cash was posted as a debit to Cash of $2,000 and a credit to Service Revenue of $2,000. 3. A debit of $880 for services provided on account was neither recorded nor posted. The credit was recorded correctly. 4. The debit to record $1,000 of cash dividends was posted to the Salary Expense account. 5. The purchase, on account, of a computer that cost $2,500 was recorded as a debit to Supplies and a credit to Accounts Payable. 6. A cash payment of $495 for salaries was recorded as a debit to Dividends and a credit to Cash.

Problems: Set B 149 Cash $ 5,465 Tot. trial balance $24,320 Journalize transactions, post, and prepare a trial balance.

(SO 3, 5, 6, 7, 8)

(d) Cash Tot. trial balance $35,270

$ 6,125 Analyze errors and their effects on the trial balance.

(SO 8)

150 CHAPTER 3. The Accounting Information System 7. Payment of month’s rent was debited to Rent Expense and credited to Cash, $850. 8. Issue of $7,000 of common shares was credited to the Common Stock account, but no debit was recorded.

Instructions

(a) Indicate which of the above transactions are correct, and which are incorrect.

(b) For each error identified in (a), indicate (1) whether the trial balance will balance;

(2) the amount of the difference if the trial balance will not balance; and (3) the trial balance column that will have the larger total. Consider each error separately. Use the following form, in which transaction 1 is given as an example.

(1) (2) (3)

Error In Balance Difference Larger Column 1h No $90 Credit.