Question

Posting errors are identified in the following table. In column (1), enter the amount of the difference between the two trial balance columns (debit and credit) due to the error. In column (2), identify the trial balance column (debit or credit) with the larger amount if they are not equal. In column (3), identify the account(s) affected by the error. In column (4), indicate the amount by which the account(s) in column (3) is under-or overstated. Item (a) is completed as an example.

Short answer

The error of posting is identified as having errors (a), (b), and (e), which affects the credit side of the trial balance; errors (f) and (g) affect the debit side of the trial balance and errors (c), and (d) have no effect on the column’s total of the trial balance.

Step-by-step solution

Errors detection in the trial balance

Any error in posting a transaction into the books of accounts is located in a trial balance. Generally, the total of the debit and the credit columns to the trial balance are equal. Whenever there is an error in posting a transaction, it is evident in the books of accounts by mismatching the debit and the credit totals. Sometimes errors may not be found due to a balanced trial balance. The efficient way to locate an error is to: i) verify the trial balance ii) verify the account balances iii) verify the postings of balances into the trial balance, and iv) re-compute and verify that each journal entry is properly posted.

Error table

	Description of Posting Error	(1) Difference between Debit and Credit Columns	(2) Column with the Larger Total	(3) Identify Account(s) Incorrectly Stated	(4) Amount that Account(s) Over-or Understated
a.	$3,600 debit to rent expense is posted as a $1,340 debit	$2,260	Credit	Rent Expense	Rent Expense understated $2,260
b.	$6,500 credit to Cash is posted twice as two credits to cash	$6,500	Credit	Cash	Cash overstated $6,500
c.	$10,900 debit to the Dividends account is debited to the Common Stock	No Difference	No column	Dividends and Common Stock	Dividend understated and common stock understated $10,900
d.	$2,050 debit to prepaid insurance is posted as a debit to Insurance Expense	No Difference	No Column	Prepaid insurance and insurance expense	Prepaid Insurance understated and Insurance Expense overstated $2,050
e.	$38,000 debit to Machinery is posted as a debit to Accounts Payable	$38,000	Credit	Machinery and Accounts Payable	Machinery is understated and Accounts Payable is overstated $38,000
f.	$5,850 credit to Services revenue is posted as a $585 credit	$5,265	Debit	Service Revenue	Service Revenue Understated $5,265
g.	$1,390 debit to Store Supplies is not posted	$1,390	Credit	Store Supplies	Store Supplies understated $1,390