O'Reilly logo

Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

EXERCISE 4-9

Purpose: (L.O. 5) This exercise will illustrate how to correct errors made in the recording process.

The following errors were discovered in the books of the Cool Way AC Repair Shop.

  1. A cash payment of $120 for repairs on a typewriter was recorded by a debit to Office Equipment and a credit to Cash.
  2. A cash payment of $70 for office supplies was recorded by a debit to Office Supplies and a credit to Accounts Payable.
  3. The declaration and distribution of a cash dividend was recorded by a debit to Salaries and Wages Expense and a credit to Cash for $700.
  4. A cash payment of $150 for an ad appearing in Sunday's edition of the local newspaper was recorded by a debit to Utilities Expense and a credit to Cash for $150.
  5. A $500 cash receipt from a customer on account was recorded by a debit to Cash for $50 and a credit to Service Revenue for $50.
  6. The first interest payment made this accounting period (on a note payable) was for $1,000, which included $300 of interest accrued at the end of the last accounting period. The payment was recorded by a debit to Interest Expense for $1,000 and a credit to Cash for $1,000. (No reversing entries were made at the beginning of this accounting period.)
  7. A $300 cash sale of services was recorded by a debit to Accounts Receivable for $300 and a credit to Service Revenue for $300.
  8. A cash payment of $2,000 for some new tools was recorded by a debit to Tools for $200 and a credit to Cash for $200.

Instructions

Prepare an analysis of each ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required