Refer to Purpleberry, Inc.’s, trial balance in Short Exercise 2-14. The purpose of this exercise is to help you learn how to correct three common accounting errors.

Error 1. Slide. Suppose the trial balance lists Land as $4,500 instead of $45,000.

Recalculate the column totals, take the difference, and divide by 9. The result is an integer (no decimals), which suggests that the error is either a transposition or a slide.

Error 2. Transposition. Assume the trial balance lists Accounts Receivable as $82,000 instead of $28,000. Recalculate the column totals, take the difference, and divide by 9. The result is an integer (no decimals), which suggests that the error is either a transposition or a slide.

Error 3. Mislabeling an item. Assume that Purpleberry, Inc., accidentally listed Accounts Receivable as a credit balance instead of a debit. Recalculate the trial balance totals for debits and credits. Then take the difference between total debits and total credits and divide the difference by 2. You get back to the original amount of Accounts Receivable.

Short Exercise 2-14

Transcribed Image Text:

A1 B E Purpleberry, Inc. Trial Balance December 31, 2018 1 2 Balance Credit 3 Account Title 4 Cash 5 Accounts receivable 6 Supplies 7 Land 8 Equipment 9 Accounts payable 10 Note payable 11 Common stock 12 Retained earnings 13 Service revenue 14 Salary expense 15 Rent expense 16 Utilities expense 17 Total 18 Debit 4,500 28,000 5,000 45,000 19,000 39,000 22,000 12,000 11,000 56,000 27,000 10,000 1,500 140,000 $ 140,000