Question

A (Part Level Submission) Dao Vang, CPA, was retained by Universal Cable to prepare financial statements for April 2017. Vang accumulated all the ledger balances per Universal’s records and found the following. UNIVERSAL CABLE Trial Balance April 30, 2017 Debit Credit Cash $4,100 Accounts Receivable 3,200 Supplies 800 Equipment 10,600 Accumulated Depreciation-Equip. $1,350 Accounts Payable 2,100 Salaries and Wages Payable 700 Unearned Service Revenue 890 Common Stock 10,000 Retained Earnings 2,900 Service Revenue 5,450 Salaries and Wages Expense 3,300 Advertising Expense 600 Miscellaneous Expense 290 Depreciation Expense 500 $23,390 $23,390 Dao Vang reviewed the records and found the following errors. 1. Cash received from a customer on account was recorded as $950 instead of $590. 2. A payment of $75 for advertising expense was entered as a debit to Miscellaneous Expense $75 and a credit to Cash $75. 3. The first salary payment this month was for $1,900, which included $700 of salaries payable on March 31. The payment was recorded as a debit to Salaries and Wages Expense $1,900 and a credit to Cash $1,900. (No reversing entries were made on April 1.) 4. The purchase on account of a printer costing $310 was recorded as a debit to Supplies and a credit to Accounts Payable for $310. 5. A cash payment of repair expense on equipment for $96 was recorded as a debit to Equipment $69 and a credit to Cash $69. Collapse question part (a) Prepare an analysis of each error showing the incorrect entry, the correct entry, and the correcting entry. Items 4 and 5 occurred on April 30, 2017. B)

Answer 1

Answer:

Dao Vang reviewed the records and found the following errors.

1. Cash received from a customer on account was recorded as $950 instead of $590.

Actual Entry                        Cash                             950 Dr.

                                 Account Receivable           950 Cr

Correct Entry                             Cash                             590 Dr

                                 Account Receivable           590 Cr

Correcting Entry           Accounts Receivable ( 950-590) 360 Dr

                                    Cash                                                       360 Cr

The correcting entry would be the difference in the wrong amounts posted

2. A payment of $75 for advertising expense was entered as a debit to Miscellaneous Expense $75 and a credit to Cash $75.

 Actual Entry            Miscellaneous Expense      $75 Dr

                                                      Cash                                       $75 Cr.

Correct Entry                Advertising  Expense      $75 Dr

                                                      Cash                                       $75 Cr

Correcting Entry           Advertising  Expense      $75 Dr

                                                 Miscellaneous Expense      $75 Cr

The correcting entry would be debit to the required expense account and credit from the wrong expense account

3. The first salary payment this month was for $1,900, which included $700 of salaries payable on March 31. The payment was recorded as a debit to Salaries and Wages Expense $1,900 and a credit to Cash $1,900. (No reversing entries were made on April 1.)

 Actual Entry        Salaries and Wages Expense         $1,900  Dr

                                                 Cash                                        $1,900 Cr

                             

Correct Entry        Salaries and Wages Payable             700   Dr

                          Salaries and Wages Expense         $1,200  Dr  

                                                Cash                                        $1,900 Cr

Correcting Entry          Salaries and Wages Payable             700 Dr

                                                    Salaries and Wages Expense         $ 700 Cr

The correcting entry would be debit to expense payable and credit to the expense.

4. The purchase on account of a printer costing $310 was recorded as a debit to Supplies and a credit to Accounts Payable for $310.

Actual Entry              Supplies                            $310 Dr

                                              Accounts Payable                $310 Cr.

Correct Entry              Office Equipment                            $310 Dr

                                                        Accounts Payable                $310 Cr.

                                   

Correcting Entry      Office Equipment                 $310 Dr

                                                     Supplies                         $310 Cr.

The correcting entry would be debit to office equipment and credit to supplies account.

5. A cash payment of repair expense on equipment for $96 was recorded as a debit to Equipment $69 and a credit to Cash $69.

Actual Entry            Equipment             $69 Dr

                                                       Cash                          $69 Cr.

Correct Entry           Repair Expense           $96 Dr

                                                       Cash                          $96 Cr.

                                   

Correcting Entry        Repair Expense           $96 Dr

                                                      Equipment                    $69 Cr

                                                             Cash                        $27 Cr

The correcting entry would be debit to the expense account with the exact value credit from equipment account and credit to the the amount remaining in the cash account.