If an incorrect amount is journalized and posted to the accounts, how should the error be corrected?
The incorrect amount can be located and corrected by making a reverse inspection of accounting records.
Accounting errors are the errors of recording and posting the transactions that affect the final accounts and provide inaccurate data for analysis.
Accounting errors can be – errors of commission, errors of omission, errors of compensation, etc.
If any incorrect amount has been journalized and posted, it can be found out and corrected in the following way –
a) By verifying the trial balance column and locating any mismatch in total due to one-sided error in posting and maintaining accounts.
b) Verifying the account balances in the trial balance and in the ledger books.
c) By ensuring that the balance of the accounts has been listed on the correct side of the trial balance.
d) If the error is still unfound, re-compute each account balance.
e) The last step is to verify each and every recorded journal entry with the source document.
Business transactions completed by Hannah Venedict during the month of September are as follows.
a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in exchange for common stock of a new company named HV Consulting.
b. The company purchased land valued at $40,000 and a building valued at $160,000. The purchase is paid with $30,000 cash and a long-term note payable for $170,000.
c. The company purchased $2,000 of office supplies on credit.
d. Venedict invested her personal automobile in the company in exchange for more common stock. The automobile has a value of $16,500 and is to be used exclusively in the business.
e. The company purchased $5,600 of additional office equipment on credit.
f. The company paid $1,800 cash salary to an assistant.
g. The company provided services to a client and collected $8,000 cash.
h. The company paid $635 cash for this month’s utilities.
i. The company paid $2,000 cash to settle the account payable created in transaction c.
j. The company purchased $20,300 of new office equipment by paying $20,300 cash.
k. The company completed $6,250 of services for a client, who must pay within 30 days.
l. The company paid $1,800 cash salary to an assistant.
m. The company received $4,000 cash in partial payment on the receivable created in transaction k.
n. The company paid $2,800 cash in dividends.
1. Prepare general journal entries to record these transactions (use account titles listed in part 2).
Question: Groro Co. bills a client $62,000 for services provided and agrees to accept the following three items in full payment: (1) $10,000 cash, (2) computer equipment worth $80,000, and (3) to assume responsibility for a $28,000 note payable related to the computer equipment. The entry Groro makes to record this transaction includes which one or more of the following?
a. $28,000 increase in a liability account
b. $10,000 increase in the Cash account
c. $10,000 increase in a revenue account
d. $62,000 increase in an asset account
e. $62,000 increase in a revenue account
f. $62,000 increase in an equity account
Question: Denzel Brooks opened a web consulting business called Venture Consultants and completed the following transactions in March.
March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company in exchange for common stock.
2 The company prepaid $6,000 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $6,000.)
3 The company made credit purchases of office equipment for $3,000 and office supplies for $1,200. Payment is due within 10 days.
6 The company completed services for a client and immediately received $4,000 cash.
9 The company completed a $7,500 project for a client, who must pay within 30 days.
12 The company paid $4,200 cash to settle the account payable created on March 3.
19 The company paid $5,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $5,000.)
22 The company received $3,500 cash as partial payment for the work completed on March 9.
25 The company completed work for another client for $3,820 on credit.
29 The company paid $5,100 cash in dividends.
30 The company purchased $600 of additional office supplies on credit.
31 The company paid $500 cash for this month’s utility bill.
3. Prepare a trial balance as of the end of March.
Question: The expanded accounting equation consists of assets, liabilities, common stock, dividends, revenues, and expenses. It can be used to reveal insights into changes in a company’s financial position.
1. Form learning teams of six (or more) members. Each team member must select one of the six components, and each team must have at least one expert on each component: (a) assets, (b) liabilities, (c) common stock, (d) dividends, (e) revenues, and ( f ) expenses.
2. Form expert teams of individuals who selected the same component in part 1. Expert teams are to draft a report that each expert will present to his or her learning team addressing the following:
e. Using the transaction and amounts in (d), verify the equality of the accounting equation and then explain any effects on the income statement and statement of cash flows.
3. Each expert should return to his/her learning team. In rotation, each member presents his/her expert team’s report to the learning team. Team discussion is encouraged.
Question: Assume that you are a cashier and your manager requires that you immediately enter each sale when it occurs. Recently, lunch hour traffic has increased and the assistant manager asks you to avoid delays by taking customers’ cash and making change without entering sales. The assistant manager says she will add up cash and enter sales after lunch. She says that, in this way, customers will be happy and the register record will always match the cash amount when the manager arrives at three o’clock. The advantage to the process proposed by the assistant manager includes improved customer service, fewer delays, and less work for you. The disadvantage is that the assistant manager could steal cash by simply recording less sales than the cash received and then pocketing the excess cash. You decide to reject her suggestion without the manager’s approval and to confront her on the ethics of her suggestion.
Propose and evaluate two other courses of action you might consider, and explain why.
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