ACCT 121 Lecture Notes - Lecture 2: Mf Global, Trial Balance, Financial Statement

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9 May 2020

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Document Summary

The trial balance: a trial balance is a list of accounts and their balances at a given time. Companies usually prepare a trial balance at the end of an accounting period: they list accounts in the order in which they appear in the ledger. Debit balances appear in the left column and credit balances in the right column. The totals of the two columns must be equal: the trial balance proves the mathematical equality of debits and credits after posting. Under the double-entry system, this equality occurs when the sum of the debit account balances equals the sum of the credit account balances. A trial balance may also uncover errors in journalizing and posting. For example, a trial balance may well have detected the error at mf. In addition, a trial balance is useful in the preparation of financial statements, the steps for preparing a trial balance are:

Related Questions

Which of the following statements related to the adjusted trial balance is incorrect?

a. It shows the balance of all accounts at the end of the accounting period.

b. Companies can prepare financial statements directly from the adjusted trial balance.

c. It is prepared before adjusting entries have been made.

d. It proves the equality of the total debit balances and the total credit balances in the ledger.

copperworm513

Effect of errors on trial balance

The following errors occurred in posting from a two-column journal:

1. A credit of $6,000 to Accounts Payable was not posted. 2. An entry debiting Accounts Receivable and crediting Fees Earned for $5,300 was not posted. 3. A debit of $2,700 to Accounts Payable was posted as a credit. 4. A debit of $480 to Supplies was posted twice. 5. A debit of $3,600 to Cash was posted to Miscellaneous Expense. 6. A credit of $780 to Cash was posted as $870. 7. A debit of $12,620 to Wages Expense was posted as $12,260.

Considering each case individually (i.e., assuming that no other errors had occurred), indicate: (a) by yes or no whether the trial balance would be out of balance; (b) if answer to (a) is yes, the amount by which the trial balance totals would differ; and (c) whether the Debit or Credit column of the trial balance would have the larger total. Answers should be presented in the following form, with error (1) given as an example: (a) (b) ( c) Error Out of Balance Difference Larger Total 1. yes $6,000 Debit

brownturtle566

The trial balance of the Mukhtar Company shown below does not balance.

Mukhtar Company

Trial Balance

September 30, 2019

Debit Credit

Cash $ 3,850

Accounts Receivable $ 2,750

Prepaid Insurance 700

Equipment 12,000

Accounts Payable 4,500

Unearned Service Revenue 560

Common Stock 11,700

Service Revenue 8,690

Salaries and Wages Expense 4,200

Advertising Expense 1,100

Utilities Expense 800

$30,800 $20,050

Your review of the ledger reveals that each account has a normal balance. You also discover the following errors.

The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Utilities Expense were each understated $100.
Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,570 and $8,960, respectively.
A debit posting to Salaries and Wages Expense of $200 was omitted.
A $1,000 cash dividend was debited to Common Stock for $1,000 and credited to Cash for $1,000.
A $520 purchase of supplies on account was debited to Equipment for $520 and credited to Cash for $520.
A cash payment of $450 for advertising was debited to Advertising Expense for $45 and credited to Cash for $45.
A collection from a customer for $420 was debited to Cash for $420 and credited to Accounts Payable for $420.

Instructions

Prepare a correct trial balance. Note that the chart of accounts includes the following:

Dividends and Supplies.

Make T accounts and post the corrections in these accounts to reach the corrected trial balance

pinkantelope626

ACCT 121 Lecture Notes - Lecture 2: Mf Global, Trial Balance, Financial Statement

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