do errors, considered individually, indicate whether the error would cause the t
ID: 2338666 • Letter: D
Question
do errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the For each of the following unequal, indicate whether the debit or credit total is higher and by how much. If trial balance totals to b the debit and credit totals would be equal, enter zero ("O") in the amount box. a. The payment of an insurance premium of $2,340 for a three-year policy was debited to Prepaid Insurance for $3,240 and credited to Cash for $2,340 are not
Explanation / Answer
Solution a:
As prepaid insurance is debited with a higher amount for $3,240 and cash account is correctly credited by $2,340, therefore error would cause the trial balance total to be unequal.
Further as prepad insurance is excess debited by $900, therefore debit column of trial balance will be higher than credit column by $900.
Solution b:
As payment of $2,575 was recorded in books as debit to accounts payable by $2,833 and credit to cash by $2,833, therefore error would not cause the trial balance total to be unequal.
As debit and credits are equal than lower or higher amount in trial balance in zero.
solution c:
In this case supplies account is correctly debited by $3,900, however accounts payable was debited by $3,900 instead of credit by $3,900. Therefore error would cause the trial balance total to be unequal.
As accounts payable was debited instead of credit, therefore debit total of trial balance will be higher than credit total by $7,800 ($3,900*2)
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