Learning Materials
Features
Discover
Chapter 2: 10RQ (page 90)
Where are transactions initially recorded?
The transaction is an exchange of good or service for some price consideration between two parties and in accounting the transactions are firstly recorded in the journal.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Correcting errors in a trial balance
The trial balance of Love to Learn Child Caredoes not balance.
Account Title Debit Credit
Office Supplies 1,000
Cash 8,060
Accounts Receivable 8,700
Prepaid Insurance 1,700
Equipment 90,400
Accounts Payable 3,000
Notes Payable 45,000
Common Stock 54,000
Dividends 3,740
Service Revenue 16,300
Rent Expense 400
Salaries Expense 4,350
Total Balance \( 118,350 \) 118,300
The following errors are detected:
a. Cash is understated by \(1,800.
b. A \)3,800 debit to Accounts Receivable was posted as a credit.
c. A \(1,000 purchase of office supplies on account was neither journalized nor posted.
d. Equipment was incorrectly transferred from the ledger as \)90,400. It should have been transferred as \(82,500.
e. Salaries Expense is overstated by \)350.
f. A \(300 cash payment for advertising expense was neither journalized nor posted.
g. A \)160 cash dividend was incorrectly journalized as \(1,600.
h. Service Revenue was understated by \)4,000.
i. A 12-month insurance policy was posted as a $1,400 credit to Prepaid Insurance. Cash was posted correctly.
Prepare the corrected trial balance as of May 31, 2018. Journal entries are not required.
Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance
The trial balance of Shawn Merry, CPA, is dated March 31, 2018: During April, the business completed the following transactions:
Cash 17,000
Office Supplies 1,200
Accounts Receivable 10,500
Land 29,000
Furniture 0
Automobile 0
Accounts Payable 3,800
Unearned Revenue 0
Common Stock 46,200
Dividends 0
Rent Expense 1,000
Salaries Expense 2,500
Service Revenue 11,200
Total Balance \( 61,200 61,200
During April, the business completed the following transactions:
Apr. 4 Collected \)6,000 cash from a client on account.
8 Performed tax services for a client on account, \(5,500.
13 Paid \)3,300 on account.
14 Purchased furniture on account, \(4,000.
15 Menning contributed his personal automobile to the business in exchange for common stock. The automobile had a market value of \)11,500.
18 Purchased office supplies on account, \(1,600.
19 Received \)2,750 for tax services performed on April 8.
20 Paid cash dividends of \(7,500.
21 Received \)4,900 cash for consulting work completed.
24 Received \(2,500 cash for accounting services to be completed next month.
27 Paid office rent, \)900.
28 Paid employee salary, $1,200.
Requirements 2. Open the four-column ledger accounts listed in the trial balance, together with their balances as of March 31. Use the following account numbers: Cash, 11; Accounts Receivable, 12; Office Supplies, 13; Land, 14; Furniture, 15; Automobile, 16; Accounts Payable, 21; Unearned Revenue, 22; Common Stock, 31; Dividends, 33; Service Revenue, 41; Salaries Expense, 51; and Rent Expense, 52.
Accounting uses a double-entry system. Explain what this sentence means
If total debits equal total credits on the trial balance, is the trial balance error-free? Explain your answer.
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Ann Simpson started her practice as a design consultant on September 1, 2018. During the first month of operations, the business completed the following transactions:
Sep. 1 Received \(48,000 cash and issued common stock to Simpson.
4 Purchased office supplies, \)1,200, and furniture, \(1,300, on account.
6 Performed services for a law firm and received \)1,900 cash.
7 Paid \(18,000 cash to acquire land to be used in operations.
10 Performed services for a hotel and received its promise to pay the \)1,200 within one week.
14 Paid for the furniture purchased on September 4 on account.
15 Paid assistant’s semimonthly salary, \(1,500.
17 Received cash on account, \)1,000.
20 Prepared a design for a school on account, \(650.
25 Received \)2,100 cash for design services to be performed in October.
28 Received \(2,900 cash for consulting with Plummer & Gordon.
29 Paid \)600 cash for a 12-month insurance policy starting on October 1.
30 Paid assistant’s semimonthly salary, \(1,500.
30 Paid monthly rent expense, \)600.
30 Received a bill for utilities, \(350. The bill will be paid next month.
30 Paid cash dividends of \)3,700.
Requirements 2. Open a T-account for each of the accounts.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App