Required informatlon The following information applies to the questions aisplaye

Question

Required informatlon The following information applies to the questions aisplayed below You are told the column totals in a trial balance are not equal. After careful analysis, you discover only one error Specifically, a correctly journalized credit purchase of an automobile for $7,000 is posted from the journal to the ledger with an $7,000 debit to Automobiles and another $7.000 debit to Accounts Payable. The Automoblies account has a debit balance of $16,590 on the trial balance. Answer each of the following questions and compute the dollar amount of any misstatement Part (o through d): For each of the following statements 1. Select the appropriate choice from the Account Status column 2 In cases where the amount is understated or overstated, use the Amount column to fill in the amount by which the account or trial balance total is understated or overstated. (Enter the amounts understated with a minus sign.) Answer is complete but not entirely correct. Statements Account Status Amount a. The debit column total of the trial balance b. The credit column total of the trial balance C d. Correctly stated 7,000 UnerstatedS 7.000 . - - . correct y stated $ s 7000 7,000 The balance of the automobiles accountin the trial balance The balance of the accounts payable account in the trial balance

Explanation / Answer

When the column of trail balance is correctly stated, amount = 0 or should be left blank. Since there is no error amount in such case.

Accounts payable which should originally be credited - was by error debited. So this is double error. As such we have to credit that account with 14000, one 7000 for cancellation of wrong debit and another 7000 for giving correct posting in the case.

a The debt column total of the trial balance Correctly stated 0 b Credit column total of the trial balance Understated 14000 c The balance of the automobiles account in the trial balance correctly stated 0 d The balance of the accounts payable account in the trial balance Understated 14000

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