As an accountant for a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of Rs 15,600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pen drive for Rs 3,500 was posted from the journal to the ledger with a Rs 3,500 debit to Office Equipment and another Rs 3,500 debit to creditor's accounts. Answer each of the following questions and present the amount of any misstatement
(a) Is the balance of the office equipment account overstated, understated or correctly stated in the trial balance?
(b) Is the balance of the creditor's account overstated, understated or correctly stated in the trial balance?
(c) Is the debit column total of the trial balance overstated, understated or correctly stated?
(d) Is the credit column total of the trial balance overstated, understated or correctly stated?
(e) If the debit column total of the trial balance is Rs 2,40,000 before correcting the error, what is the total of credit column?

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Solution

According to the given information, trial balance does not agree. Pen-drive is wrongly debited to office equipment account, instead of stationery account and supplier account is debited instead of crediting.

Due to these mistakes, the following errors are committed:
1. The balance of office equipment is overstated by Rs. 3,500.
2. The balance of creditors account id understated by Rs. 7,000.
3.The total of the debit column of the trial balance is correctly stated.
4. The total of the credit column of the trial balance is understated by Rs. 7,000.
5. If the total of the debit column of the trial balance is Rs. 2,40,000 before rectifying error, the total of the credit column of the trial balance is Rs. 2,33,000 (i.e., Rs. 2,40,000 - Rs. 7,000).

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Similar questions

Q. As an accountant for a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of Rs 15,600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pen drive for Rs 3,500 was posted from the journal to the ledger with a Rs 3,500 debit to Office Equipment and another Rs 3,500 debit to creditor's accounts. Answer each of the following questions and present the amount of any misstatement
(a) Is the balance of the office equipment account overstated, understated or correctly stated in the trial balance?
(b) Is the balance of the creditor's account overstated, understated or correctly stated in the trial balance?
(c) Is the debit column total of the trial balance overstated, understated or correctly stated?
(d) Is the credit column total of the trial balance overstated, understated or correctly stated?
(e) If the debit column total of the trial balance is Rs 2,40,000 before correcting the error, what is the total of credit column?

As an accountant for a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of Rs. 15,600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pen drive for Rs. 3,500 was posted from the journal to the ledger with an Rs. 3,500 debit to Office Equipment and another Rs. 3,500 debit to creditor's accounts. Answer each of the following questions and present the amount of any misstatement

(a) Is the balance of the office equipment account overstated, understated or correctly stated in the trial balance?

(b) Is the balance of the creditor's account overstated, understated or correctly stated in the trial balance?

(d) Is the credit column total of the trial balance overstated, understated or correctly stated?

(e) If the debit column total of the trial balance is Rs. 2,40,000 before correcting the error, what is the total of credit column?

Q. In recording a receipt of Rs 100 of cash from a customer on account, the cash account is erroneously credited instead of being debited (Account receivable account is credited for the correct amount). Assuming no other error, the debit total of the trial balance at the end of the month is Rs.7,600. What is the total of the credit column of the trial balance?

State true or false:

1) A Trial balance is an account.
2) A Trial balance is helpful for preparation of final accounts.
3) A Trial balance is most important document.
4) A Trial balance may be prepared on any date.
5) In Trial balance opening stock is recorded in credit balance column.
6) Both sides total of an account are taken in Gross Trial Balance.
7) Purchase account always shows debit balance.
8) A Trial balance is a List of Ledger balances.
9) A Trial balance does not ensure accounting accuracy.
10) A Trial balance shows only arithmetical accuracy.

If the total of the debit column in the trial balance is more than the credit column, the difference is placed to the_____ of suspense account so that the trial balance may tally.

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