Julie Palmer has trouble keeping her debits and credits equal. During a recent month, Julie made the following errors:
a. Julie recorded a $750 payment of rent by debiting Rent Expense for $75 and crediting Cash for $75.
b. In recording a $250 payment on account, Julie debited Accounts Receivable and credited Cash.
c. Julie recorded the receipt of cash for service revenue by debiting Cash for $130 instead of the correct amount of $310. Julie also credited Service Revenue for $130, the incorrect amount.
d. Julie recorded a $120 purchase of supplies on account by debiting Accounts Payable and crediting Supplies.
e. In preparing the trial balance, Julie omitted a $15,000 note payable.
Requirements
1. For each of these errors, state whether Julie’s mistake would cause the total debits and total credits on the trial balance to be unequal.
2. Identify each account with an incorrect balance, and indicate the amount and direction of the error.
Use the following format:
Effect on Trial Balance Account(s) Misstated
Total debits = Total credits ..... Cash
$675 too high
Rent Expense
$675 too low