Julie, a New Employee, Is Not Sure of the Effect

question 128

Essay

Julie, a new employee, is not sure of the effect the following unrelated situations would have on the accuracy of the financial statements. Identify the account(s) that are affected and if the trial balance would balance.
(a) Equipment was purchased for $1,000 cash. The debit was recorded properly, but the credit was omitted.
(b) A debit to Cash for $250 was posted as $2,500; the credit was posted correctly.
(c) A purchase of supplies on account for $75 was posted as a debit to Supplies and a credit to Cash.

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Definitions:

Personal Exemption

A deduction that allowed taxpayers to reduce taxable income for themselves and for any dependents claimed, notably reduced to $0 for tax years 2018 through 2025 under the Tax Cuts and Jobs Act.

Qualifying Relative

A designated family member or other individual who meets specific IRS criteria for dependency exemptions.

Blind

A status on tax filings that provides additional deductions or credits for individuals who are legally blind.

Joint Return

A tax return filed jointly by a married couple, combining their incomes, exemptions, and deductions.