Question

-Analyzing a trial balance error

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 $18,800 is posted from the journal to the ledger with an $18,800 debit to Automobiles and another $18,800 debit to Accounts Payable. The Automobiles account has a debit balance of $44,556 on the trial balance. Answer each of the following questions and compute the dollar amount of any misstatement.

Part (a 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.)

	Statements Account Status Amount a. The debit column total of the trial balance b. The credit column total of the trial balance c. The balance of the automobiles account in the trial balance d. The balance of the accounts payable account in the trial balance

  
    

Answer 1

Ans:

1. When any asset is purchased on credit, That asset should be debited and Account payable should be credited

Here $18,800 was wrong debited to account payable

The results in debit of $18,800, The accounts payable was Understated.

2.

Statements Account Status Amount a. The debit column total of the trial balance Overstated $18,800 b. The credit column total of the trial balance Understated $18,800 c. The balance of the automobiles account in the trial balance Not Effected NA d. The balance of the accounts payable account in the trial balance Understated $18,800