Ann Company collected $9,000 cash that was due from an account receivable. Ann’s

Question

Ann Company collected $9,000 cash that was due from an account receivable. Ann’s accountant recorded the collection with a debit to cash and a credit to service revenue. As a result of this error

a. the totals of the trial balance will be equal.

b. the total of the debit balances of the trial balance will be greater than the total of the credit balances.

c. the total of the credit balances of the trial balance will be greater than the total of the debit balances.

d. the answer cannot be determined from the information provided.

Explanation / Answer

First entry:

CashA/c Debited By $9000 and Service revenue is credited by $9000.

Therefore, Due to above entry Service revenue wrongly increased by $9000 and Accounts receivable shown balance amount of $9000 even though it was collected.

Therefore, Excess of $9000 in Service revenue will be setoff by Excess of $9000 in Accounts receivable

So, the totals of the trial balance will be equal.

Therefore, Option a. the totals of the trial balance will be equal is correct.

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