Question

A trial balance has total debits of \(20,000 and total credits of \)24,500. Which one of the following errors would create this imbalance? Explain.

a. A \(2,250 debit to Utilities Expense in a journal entry was incorrectly posted to the ledger as a \)2,250 credit, leaving the Utilities Expense account with a \(3,000 debit balance.

b. A \)4,500 debit to Salaries Expense in a journal entry was incorrectly posted to the ledger as a \(4,500 credit, leaving the Salaries Expense account with a \)750 debit balance.

c. A \(2,250 credit to Consulting Fees Earned (Revenues) in a journal entry was incorrectly posted to the ledger as a \)2,250 debit, leaving the Consulting Fees Earned account with a \(6,300 credit balance.

d. A \)2,250 debit posting to Accounts Receivable was posted mistakenly to Land.

e. A \(4,500 debit posting to Equipment was posted mistakenly to Cash.

f. An entry debiting Cash and crediting Accounts Payable for \)4,500 was mistakenly not posted.

Short answer

Answer

The correct answer is option a.

Step-by-step solution

Trial balance

A trial balance is the list of all accounts having their balance as debit or credit. All accounts having debit balances are listed on the left side and all accounts having credit balances are listed on the right side.

Analysis of all statements

a) In this error, the utility expenses have a debit balance of $3,000 having an error. If the error is rectified then the credit side would reduce by $2,250 and the debit side would increase by $2,250. So, there would be a net effect of $4,500 on the debit side. Thus, this is the possible error in creating an imbalance.

b) In this error, there is an error of $9,000 on the debit side. So, This is not the appropriate mistake to be rectified.

c) In this statement, there is an error of $4,500 on the credit side. So, this statement is also wrong.

d) In this statement there is no net effect of the error. This is a compensating error.

e) This is also a compensating error.

f) There is no effect on the trial balance due to this error.