Question

[The following information applies to the questions displayed 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 $16,850 is posted from the journal to the ledger with an $16,850 debit to Automobiles and another $16,850 debit to Accounts Payable. The Automobiles account has a debit balance of $39,934 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.)

Required information he following information applies to the questions displayed 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 $16,850 is posted from the journal to the ledger with an $16,850 debit to Automobiles and another $16,850 debit to Accounts Payable. The Automobiles account has a debit balance of $39,934 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 ectly stated nderstated 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 Understated stated

Answer 1

Statement

Accounts

Amount

Status

a.

The debit column total of Trial Balance

Correctly Stated

0

b.

The Credit column total of Trial Balance

Understated

33700

c,

The balance of automobile account in Trial Balance

Correctly Stated

0

d.

The Balance of Accounts payable account in Trial balance

Understated

33700

Note: Automobile Accounts has been correctly posted in the debit side of accounts. Hence, the balance in Automobile account and Debit side of Trial balance is correctly stated.

Note: However, the Amount has been posted in the debit side of Accounts payable which should have been posted on the credit side.

Hence, the credit balance of Accounts payable will get reduced by double of the amount i.e. 16850*2, due to amount posted in wrong side instead of posting in the credit side.

Therefore, the error is having an effect of understating the Accounts payable balance and Credit column of Trial balance by $ 33700.