Question

Trial Balance Errors 

For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. If the debit and credit totals would be equal, enter zero ("0") in the amount box. 

a. The payment of an insurance premium of $7,450 for a three-year policy was debited to Prepaid Insurance for $7,540 and credited to Cash for $7,450. 

Which of the following is true? 

The debit column on the trial balance would be higher than the credit total. 

If the totals on the trial balance are not equal, by how much is one column higher than the other? $ _______  

b. A payment of $2,575 on account was debited to Accounts Payable for $3,219 and credited to Cash for $3,219. 

Which of the following is true? 

The debit and credit totals of the trial balance would be equal. 

If the totals on the trial balance are not equal, by how much is one column higher than the other? $ _______ 

c. A purchase of supplies on account for $3,540 was credited to Supplies for $3,540 and credited to Accounts Payable for $3,540.

Which of the following is true? The credit column on the trial balance would be higher than the debit total. If the totals on the trial balance are not equal, by how much is one column higher than the other? $ _______ 

Answer 1

Solution a:

Debit will be Higher by = 7540 - 7450 = $90

Solution b:

Debit and credit would be equal.

Solution c:

Credit will be higher by = $3540 + $3540 = $7,080