At Year-End, Henry Laundry Service Noted the Following Errors in Its

question 198

Essay

At year-end, Henry Laundry Service noted the following errors in its trial balance:
1. It understated the total debits to the Cash account by $500 when computing the account balance.
2. A credit sale for $311 was recorded as a credit to the revenue account, but the offsetting debit was not posted.
3. A cash payment to a creditor for $2,600 was never recorded.
4. The $680 balance of the Prepaid Insurance account was listed in the credit column of the trial balance.
5. A $24,900 van purchase was recorded as a $24,090 debit to Equipment and a $24,090 credit to Notes Payable.
6. A purchase of office supplies for $150 was recorded as a debit to Office Equipment. The offsetting credit entry was correct.
7. An additional investment of $4,000 by the stockholder was recorded as a debit to Common Stock and as a credit to Cash.
8. The cash payment of the $510 utility bill for December was recorded (but not paid) twice.
9. The revenue account balance of $79,817 was listed on the trial balance as $97,817.
10. A $1,000 cash dividend was recorded as a $100 debit to Dividends and $100 credit to Cash.
143.
Using the form below, indicate whether each error would cause the trial balance to be out of balance, the amount of any imbalance, and whether a correcting journal entry is required.
$\begin{array}{|l|c|c|c|}\hline \quad \quad \quad &\text {Would the error }&\\ &\text {cause the trial }&& \text {Correcting }\\ &\text {balance to be out } & \text { Amount of }&\quad \text {Journal Entry} \\ &\text {of balance?} &\text { Imbalance}& \text {Reguired} \\\end{array}$
$\begin{array}{|r|l|l|l|l|l|}\hline \text { Error } & \quad\quad\text { Yes }& \quad\text { No } & \quad \quad \quad \quad\quad& \quad\text { Yes }&\quad\text { No } \\\hline 1 & \\\hline 2 & \\\hline 3 & \\\hline 4 & \\\hline 5 & \\\hline 6 & \\\hline 7 & \\\hline 8 & \\\hline 9 & \\\hline 10 & \\\hline\end{array}$

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Definitions:

Estimated Overhead Cost

The anticipated cost of indirect expenses required to manage and operate a business over a specific period.

Actual Overhead

The real costs incurred from indirect expenses such as utilities, rent, and administrative salaries in the production process.

Applied Overhead

An estimate of manufacturing overhead costs allocated to individual units of production.

Factory Overhead Account

An account used to accumulate all indirect costs associated with the production process, including indirect labor, materials, and other manufacturing overheads.