The Bookkeeper Made the Following Errors While Recording Transactions for the Period

question 47

Essay

The bookkeeper made the following errors while recording transactions for the period:
A)A purchase of equipment for $450 cash was recorded as a debit to Equipment for $540 and a credit to Cash for $540.
B)The sale of services for cash in the amount of $4,134 was recorded as a debit to Cash for $4,134 and a credit to Service Revenue for $4,314.
C)A purchase of supplies for $200 cash was recorded correctly in the journal but was omitted from the general ledger.
D)The sale of services for credit in the amount of $3,800 was recorded correctly in the journal but was posted twice to the general ledger.
E)$5,500 cash paid for salaries was recorded in the journal as a $5,500 debit to Cash and a $5,500 credit to Salaries Expense.
Indicate whether or not the debit and credit columns of the trial balance will be equal after recording each of these erroneous entries. Then identify the account(s) that will be misstated as a result of these errors and the direction of the misstatement (i.e., understatement or overstatement).

• A)A purchase of equipment for $450 cash was recorded as a debit to Equipment for $540 and a credit to Cash for $540.
• B)The sale of services for cash in the amount of $4,134 was recorded as a debit to Cash for $4,134 and a credit to Service Revenue for $4,314.
• C)A purchase of supplies for $200 cash was recorded correctly in the journal but was omitted from the general ledger.
• D)The sale of services for credit in the amount of $3,800 was recorded correctly in the journal but was posted twice to the general ledger.
• E)$5,500 cash paid for salaries was recorded in the journal as a $5,500 debit to Cash and a $5,500 credit to Salaries Expense.
• Indicate whether or not the debit and credit columns of the trial balance will be equal after recording each of these erroneous entries. Then identify the account(s) that will be misstated as a result of these errors and the direction of the misstatement (i.e., understatement or overstatement).

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Definitions:

National Saving

The total amount of savings in a country, consisting of both private savings by households and public savings by the government.

Government Budget Deficit

The financial situation where a government's expenditures exceed its revenues, leading to borrowing or debt accumulation.

Exchange Rate

The exchange rate of one currency to another.

Yen

The official currency of Japan, symbolized as ¥ and known in finance as JPY.