Question: A first year co op student working for Solutia Inc recorded

A first year co-op student working for Solutia Inc. recorded the transactions for the month. He wasn’t exactly sure how to journalize and post, but he did the best he could.
He had a few questions, however, about the following transactions.
1. Cash received from a customer on account was recorded as a debit to Cash of $360 and a credit to Accounts Receivable of $630, instead of $360.
2. A service performed for cash was posted as a debit to Cash of $2,000 and a credit to Service Revenue of $2,000.
3. A debit of $880 for services performed on account was neither recorded nor posted. The credit was recorded correctly.
4. The debit to record $1,000 of cash dividends was posted to the Salaries and Wages Expense account.
5. The purchase, on account, of a computer that cost $2,500 was recorded as a debit to Supplies and a credit to Accounts Payable.
6. A cash payment of $495 for salaries was recorded as a debit to Dividends and a credit to Cash.
7. Payment of month’s rent was debited to Rent Expense and credited to Cash, $850.
8. Issue of $5,000 of common shares was credited to the Common Stock account, but no debit was recorded.

(a) Indicate which of the above transactions are correct, and which are incorrect.
(b) For each error identified in (a), indicate
(1) Whether the trial balance will balance;
(2) The amount of the difference if the trial balance will not balance; and
(3) The trial balance column that will have the larger total. Consider each error separately.
Use the following form, in which transaction 1 is given as anexample.

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  • CreatedApril 07, 2014
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