Question : 224. Exhibit 2-1All nine transactions for Bowan Realty for June, the : 1233833

 

224. Exhibit 2-1All nine transactions for Bowan Realty for June, the first month of operations, are recorded in the following T accounts: 

Cash

 

Capital Stock

(1)

20,000 

(3)

7,500

 

 

 

(1)

20,000

(7)

6,900 

(5)

2,600

 

 

 

 

 

(9)

4,700 

(6)

5,500

 

 

 

 

 

 

 

(8)

2,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Receivable

 

Dividends

(4)

4,900 

(9)

4,700

 

(8)

2,000 

 

 

 

 

 

 

 

 

 

 

 

 

Supplies

 

Fees Earned

(3)

7,500

 

 

 

 

 

(4)

4,900

 

 

 

 

 

 

 

(7)

6,900

 

 

 

 

 

 

 

 

 

 

Equipment

 

Operating Expense

(2)

4,500

 

 

 

(6)

5,500

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Payable

 

 

(5)

2,600

(2)

4,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Refer to Exhibit 2-1. Prepare a trial balance, listing the accounts in their proper order. 

225. 

(a)List the errors in the following trial balance. All accounts have normal balances.

(b)What would be the new balance of the trial balance after errors are corrected? What would be the balance of Accounts Receivable?

Herb’s Auto ServiceTrial BalanceFor Month Ending September 30, 2007

Cash 19,475

Accounts Receivable? 

Supplies 1,000

Equipment15,000 

Prepaid Insurance 500

Accounts Payable 2,500

Capital Stock17,000 

Dividends 1,000

Fees Earned 49,600

Salary Expense14,500 

Rent Expense 9,000

Utilities Expense1,400 

Supplies Expense3,900 

Miscellaneous Expense     250             

 55,000  81,575

226. Answer the following questions for each of the errors listed below, considered individually: 

(a)Did the error cause the trial balance totals to be unequal?

(b)What is the amount of the difference between the trial balance totals (where applicable)?

(c)Which of the trial balance totals, debit or credit, is the larger (where applicable)?

Present your answers in columnar form, using the following headings: 

ErrorTotalsDifference in TotalsLarger of Totals

(identifying number)      (equal or unequal) (amount)(debit or credit)

Errors:

(1)Cash Dividends of $1,000 cash paid to the stockholders was recorded by a debit of $1,000 to Salary Expense and a credit of $1,000 to Cash.

(2)A $950 purchase of supplies on account was recorded as a debit of $1,950 to Equipment and a credit of $1,950 to Accounts Payable.

(3)A purchase of equipment for $4,500 on account was not recorded.

(4)A $630 receipt on account was recorded as a $630 debit to Cash and a $360 credit to Accounts Receivable.

(5)A payment of $1,030 cash on account was recorded only as a credit to Cash.

(6)Cash sales of $9,500 were recorded as a credit of $9,500 to Cash and a credit of $9,500 to Fees Earned.

(7)The debit to record a $5,000 cash receipt on account was posted twice; the credit was posted once.

(8)The credit to record an $800 cash payment on account was posted twice; the debit was posted once.

(9)The debit balance of $9,400 in Accounts Receivable was recorded in the trial balance as a debit of $9,300.