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    y2jgirl's Avatar
    y2jgirl Posts: 1, Reputation: 1
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    #1

    Jan 20, 2010, 05:45 AM
    Corrected trial balance
    I am working on a corrected trial balance for school and am having trouble getting it to work out. Here is the set up and what I have for starting balances:

    Cash - Cr 2870
    Accounts Receivable - Dr 3231
    Supplies - Dr 800
    Equipment - Dr 3800
    Accounts Payable - Cr 2666
    Unearned Service Revenue - Dr 1200
    Common Stock - Cr 6000
    Retained Earnings - Cr 3000
    Service Revenue - Cr 2380
    Wages Expense - Dr 3400
    Office Expense - Dr 940

    This leaves us with a debit balance of $13371 and a credit balance of $16916

    So, here are the errors and what are my thoughts to do with them:

    Cash received from a customer on account was debited for $370, and Accounts Receivable was credited for the same amount. The actual collection was for $730.
    My thoughts were to Dr. Cash 360 and Cr Accounts Receivable 360

    The purchase of a computer printer on account for $500 was recorded as a debit to Supplies for $500 and a credit to Accounts Payable for $500.
    My thoughts were to Dr. Equipment 500 and Cr Supplies 500

    Services were performed on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89
    My thoughts were to Cr Service Revenue 801

    A payment of $65 for telephone charges was recorded as a debit to Office Expense for $65 and a debit to Cash for $65.
    My thoughts were to Cr Cash 65

    When the Unearned Revenue Service Revenue account was reviewed, it was found that 225 of the balance was earned prior to June 30.
    My thought was to Cr Unearned Service Revenue for 225 but I feel there is another account that I should be doing something to.

    A debit posting to Wages Expense of $670 was omitted.
    My thought was to Dr. Wages Expense 670

    A payment on account for $206 was credited to cash for 206 and credited to accounts payable for $260.
    My thought was to Dr. Accounts Payable 466

    A dividend of 575 was debited to Wages Expense for 575 and credited to cash for 575
    My thought was to Cr Wages Expense 575, make a new account and Dr. Dividend 575, and make another account Cr. Drawing 575.

    Am I on the right track ? I am having some balancing issues so I wanted to make sure that I was in the right ballpark.

    Thank you!!
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Jan 22, 2010, 11:47 PM
    Cash received from a customer on account was debited for $370, and Accounts Receivable was credited for the same amount. The actual collection was for $730.
    My thoughts were to Dr. Cash 360 and Cr Accounts Receivable 360

    The purchase of a computer printer on account for $500 was recorded as a debit to Supplies for $500 and a credit to Accounts Payable for $500.
    My thoughts were to Dr. Equipment 500 and Cr Supplies 500

    Services were performed on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89
    My thoughts were to Cr Service Revenue 801
    All correct.

    A payment of $65 for telephone charges was recorded as a debit to Office Expense for $65 and a debit to Cash for $65.
    My thoughts were to Cr Cash 65
    Well, you finally flubbed up. I guess I'll assume they actually want the telephone to go into office expense instead of the typical utilities expense. (Personally, I prefer office expense anyway.) You have the right idea to credit cash, but you have to take it one step further. Crediting cash is only going to un-do the accidental debit, putting it back at a net zero change in the account. You still have to get the actual credit in there.

    Hint: any time you debit when you should credit, or subtract when you have added, or anything that goes the opposite direction, will actually double the mistake.

    When the Unearned Revenue Service Revenue account was reviewed, it was found that 225 of the balance was earned prior to June 30.
    My thought was to Cr Unearned Service Revenue for 225 but I feel there is another account that I should be doing something to.
    I think you're too busy trying to "correct" an entry when the entry was just downright left out. Note it says "225 of the balance" - which means that 225 is already in the Unearned account. That accounts represents what you have gotten paid in advance for, but have not done the work yet. They are saying that as it turns out, 225 of what is in there has actually now been earned - the work got done in June. So it's no longer an unearned and must be removed from that account. (Opposite of what you're doing.) And it's now earned, so those earnings have to be recognized. It's just a typical adjusting entry that was left out, rather than an actual correction of an error.

    A debit posting to Wages Expense of $670 was omitted.
    My thought was to Dr. Wages Expense 670

    A payment on account for $206 was credited to cash for 206 and credited to accounts payable for $260.
    My thought was to Dr. Accounts Payable 466
    Both correct. Just a comment on this last one: this is the same concept as when the cash for 65 was on the wrong side. I think you caught this one because it was also for the wrong dollar amount. Dr. 260 to un-do the credit, AND Dr the 206 that should've been done. It's the same idea, except the other one is the same dollar amount.

    A dividend of 575 was debited to Wages Expense for 575 and credited to cash for 575
    My thought was to Cr Wages Expense 575, make a new account and Dr. Dividend 575, and make another account Cr. Drawing 575.
    The credit to cash was correct to begin with. (I'm assuming that. In real life it would be Dividends Payable, but at beginning levels they just "pay" them right off. Or, if this is still a one-owner company, the owner will just pay it and not "declare" it first. Given the level of this work, that would be my guess of what they're expecting.)

    There's two issues with crediting drawing. For one, it's a debit account and you're trying to subtract from it when it was never put in there to begin with. Second, a dividend is for a corporation and is the same thing as drawing, but using a different name. A drawing is the owner taking out money from his/her own company. A dividend is money being paid to the owners, the stockholder(s). Same idea, but different names are used. A corporation doesn't have a drawing account - it's been replaced with the dividend account.

    Am I on the right track ? I am having some balancing issues so I wanted to make sure that I was in the right ballpark.
    Most definitely on the right track with a couple of flub-ups. Better than many people would have done! I think you had two corrections where you put yourself back out of balance.
    isabella1001's Avatar
    isabella1001 Posts: 3, Reputation: 1
    New Member
     
    #3

    Jun 30, 2012, 09:53 AM
    What about this statement:
    A payment balance due to for $206 was credited to Cash for $206 and credited to account payable for $260

    My thought was Minus $260 from Acc payable and +54 since its wrong amount entries but my answer is wrong it supposed to minus $260 and $206.. But I don't understand, why is it minus $206 on acc payable. Could anyone help me to explain this?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
     
    #4

    Jul 2, 2012, 07:19 AM
    The correct journal entry should have been:
    Debit Accounts Payable for 206
    Credit Cash for 206

    The actual journal entry was:
    Credit Cash for 206
    Credit Accounts Payable for 260

    Now to correct this I would Debit Accounts Payable for 260 to reverse the original entry to Accounts Payable, then Debit Accounts Payable for 206.

    By Seeing what the original entry should have been and seeing what the actual entry was will help to figure out how to correct the entry.
    Sometines it is best to reverse the actual entry(or parts of it) and making the correct entry will help you arrive at the correct amounts.
    Whitesand's Avatar
    Whitesand Posts: 10, Reputation: 1
    New Member
     
    #5

    Jun 21, 2013, 07:22 PM
    Should we correct how Cash is Credited (even though it's normal balance is Dr.) and how Service Revenue is Debited (even though it's normal balance is Cr.)? When I tried to put them in their normal balances, the adjusted trial balance... balanced! Is there a need to adjust these two accounts (in terms of their normal balances)?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
     
    #6

    Jun 21, 2013, 07:38 PM
    There is no need to adjust the accounts. You basically are correcting an error posting from your T-accounts to your trial balance. For Example you have a Debit balance in Cash on your Cash T-accounts, but on your trial balance your Cash account has a Credit Balance. You just need to move your balance amount in Cash from a Credit balance to a Debit balance.
    Whitesand's Avatar
    Whitesand Posts: 10, Reputation: 1
    New Member
     
    #7

    Jun 21, 2013, 07:50 PM
    Quote Originally Posted by pready View Post
    There is no need to adjust the accounts. You basically are correcting an error posting from your T-accounts to your trial balance. For Example you have a Debit balance in Cash on your Cash T-accounts, but on your trial balance your Cash account has a Credit Balance. You just need to move your balance amount in Cash from a Credit balance to a Debit balance.
    Thanks for clarifying that! :) Could you please help me out with one of the questions I've posted regarding analyzing adjusted data?

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