Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 4 Accounting Information Systems 191

Indicate which of the following errors, each considered individually, would cause the trial bal-

ance totals to be unequal:

a. A payment of $7,000 for equipment purchased was posted as a debit of $700 to

Equipment and a credit of $700 to Cash.

b. Payment of a cash dividend of $12,000 was journalized and posted as a debit of $21,000 to

Salary Expense and a credit of $12,000 to Cash.

c. A fee of $1,850 earned and due from a client was not debited to Accounts Receivable or

credited to a revenue account, because the cash had not been received.

d. A payment of $1,475 to a creditor was posted as a debit of $1,475 to Accounts Payable

and a debit of $1,475 to Cash.

e. A receipt of $325 from an account receivable was journalized and posted as a debit of

$325 to Cash and a credit of $325 to Fees Earned.

The following preliminary trial balance of Escalade Co., a sports ticket agency, does not balance:

When the ledger and other records are reviewed, you discover the following: (1) the debits and

credits in the cash account total $47,350 and $33,975, respectively; (2) a billing of $2,500 to a cus-

tomer on account was not posted to the accounts receivable account; (3) a payment of $1,800

made to a creditor on account was not posted to the accounts payable account; (4) the balance

of the unearned rent account is $4,250; (5) the correct balance of the equipment account is

$75,000; and (6) each account has a normal balance.

Prepare a corrected trial balance.

The following errors occurred in posting from a two-column journal:

1. A debit of $1,250 to Supplies was posted twice.


2. A debit of $3,575 to Wages Expense was posted as $3,557.


3. A credit of $4,175 to Accounts Payable was not posted.


4. A debit of $400 to Accounts Payable was posted as a credit.


5. An entry debiting Accounts Receivable and crediting Fees Earned for $6,000 was not posted.


6. A credit of $350 to Cash was posted as $530.


7. A debit of $1,000 to Cash was posted to Miscellaneous Expense.

Considering each case individually (i.e., assuming that no other errors had occurred), indicate:

(a) by “yes” or “no” whether the trial balance would be out of balance; (b) if answer to (a) is

Exercise 4-21

Effect of errors on trial
balance

Goals3, 4

Exercise 4-22

Errors in trial balance

Goals3, 4

Total debit column, $181,600

Exercise 4-23

Effect of errors on trial
balance

Goals3, 4

Escalade Co.

Trial Balance

December 31, 2006

Debit Credit

Balances Balances

Cash 47,350

Accounts Receivable 22,100

Prepaid Insurance 8,000

Equipment 57,000

Accounts Payable 12,980

Unearned Rent 4,520

Capital Stock 25,000

Retained Earnings 57,420

Dividends 10,000

Service Revenue 83,750

Wages Expense 42,000

Advertising Expense 7,200

Miscellaneous Expense 1,425

226,070 152,675