25E_2 - Horngren'S Financial And Managerial Accounting

Question

Question: Courtney Meehan has trouble keeping her debits and credits equal. During a recent month, Courtney made the following accounting errors: 

a. In preparing the trial balance, Courtney omitted a \(5,000 Notes Payable. The debit to Cash was correct. 

b. Courtney posted a \)1,000 Utilities Expense as \(100. The credit to Cash was correct. 

c. In recording a \)600 payment on account, Courtney debited Furniture instead of Accounts Payable. 

d. In journalizing a receipt of cash for service revenue, Courtney debited Cash for \(50 instead of the correct amount of \)500. The credit was correct. 

e. Courtney recorded a \(210 purchase of office supplies on account by debiting Office Supplies for \)120 and crediting Accounts Payable for \(120. 

Requirements 2. Identify each account that has an incorrect balance and the amount and direction of the error (e.g., “Accounts Receivable \)500 too high”).

Step-by-Step Solution

Answer

Amount and direction of error shown in step 2.

Step-by-Step Solution Step 1: Definition of Service Revenue

The accounts payable is defined as the amount of money owed to the supplier of goods or services.

Step 2:Identification of incorrect balances

Account Names	Amount ($)	Direction of Error
A Notes Payable	5,000	Too Low
B utility Expense	900	Too Low
C Accounts Payable/Furniture	600	Too High
D Cash	450	Too Low
E Office Supplies/ Accounts Payable	90	Too low