Effect of Errors on Adjusted Trial Balance For each of the following errors, con

Question

Effect of Errors on Adjusted Trial Balance

For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.

a. The adjustment of $9,800 for accrued fees earned was journalized as a debit to Accounts Receivable for $9,800 and a credit to Fees Earned for $8,900.

Enter the difference between the debit and credit totals. If the totals are equal, enter a zero.
$

b. The adjustment of depreciation of $3,600 was omitted from the end-of-period adjusting entries.

Enter the difference between the debit and credit totals. If the totals are equal, enter a zero.
$

Explanation / Answer

Answer:-a) Debit side Higher by $900

The debit and credit were not posted as the same amount, causing the adjusted trial balance totals to be unequal.

Debit Credit

Before Error Equal Equal

After Error (Increase) $9,800 $8,900   

Diffrence $ 900

Answer:- b) $0 (Totals are equal both debit & credit of Trial)

Effect of omitting adjustment entry for depreciation of $3600.

Error omission is two types :-

Full omission

Partial omission

Full omission not effected on trial.Partial omission may effect on trial.

INCOME STATEMENT:

revenues - no effect
expenses - understated
net income - overstated

RETAINED EARNINGS STATEMENT:
net income - overstated
retained earnings - overstated

BALANCE SHEET:
assets - overstated
liabilities - no effect
Owner/SH Fund- overstated

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