Question

Exercise 2-20 Identifying effects of posting errors on the trial balance LO A1, P2 Posting errors are identified in the following table. In column (1), enter the amount of the difference between the two trial balance columns (debit and credit) due to the error. In column (2), Identify the trial balance column (debit or credit) with the larger amount if they are not equal. In column (3). Identify the account(s) affected by the error. In column (4), indicate the amount by which the accounts) in column (3) is under or overstated. Item (a) is completed as an example. (Select "None" If there is no effect.) (1) (4) Description of Posting Error Identify Account(s) Incorrectly stated Amount That Account(s) Over or Understated Difference Column between with the Debit and Larger Credit Total Columns 450 Credit Rent Expense Rent Expense is understated by $450 $1.940 debit to Rent Expense is posted as a $1,490 debit $3,880 credit to Cash is posted twice as two credits to Cash $7.760 debit to the Withdrawals account is debited to Owner's Capital $1,790 debit to Prepaid Insurance is posted as a debit to Insurance Expense. $33.950 debit to Machinery is posted as a debit to Accounts Payable. $4,780 credit to Services Revenue is posted as a $478 credit. 9. $980 debit to Store Supplies is not posted.

Answer 1

	Description of Posting Error	(1) Difference between Debit & Credit Columns	(2) Column with the Larger Total	(3) Identify Account(s) Incorrectly stated	(4) Amount that Account(s) Over-or Understated
a.	$1940 debit to Rent Expense is posted as $190 debit	$450	Credit	Rent Expense	Rent Expense is understated by $450
b.	$3880 credit to cash is posted twice as two credits to Cash	$3880	Credit	Cash	Cash understated by $3880
c.	$7760 debit to the Withdrawals account is debited to owner’s capital	$0	NA	Withdrawals	Withdrawals understated by $7790
				Owners Capital	Owners Capital understated by $7790
d.	$1790 debit to Prepaid Insurance is posted as debit to Insurance Expense	$0	NA	Prepaid Insurance	Prepaid Insurance understated by $1790
				Insurance Expense	Insurance Expense overstated by $1790
e.	$33950 debit to Machinery is posted as a debit to accounts payable	$0	NA	Machinery	Machinery understated by $33950
				Accounts Payable	Accounts Payable understated by $33950
f.	$4780 credit to Services Revenue is posted as a $478 Credit	$4302	Debit	Service Revenue	Service Revenue understated by $4302
g.	$980 debit to store supplies is not posted	$980	Credit	Store supplies	Store supplies understated by $980