Question

Top Cut, Inc.’s trial balance shows $42,000 on both debit and credit sides. Top Cut’s accountant found the following mistakes:
1. Purchase of Equipment $2,000 on account was incorrectly recorded as cash payment.
2. A payment of $1,200 to a supplier on account was incorrectly recorded as $2,100.
3. Cash paid for dividends of $1,500 was incorrectly recorded as salary expense.
4. Issued 2,000 shares for $6,000 to shareholders, which was incorrectly recorded as Revenue.
5. Paid $750 for an insurance policy that was incorrectly recorded as insurance expense.
Requirements
1. What are the correct debit and credit balances?
2. Does each error change the overall debit and credit balance?
3. What is the impact on each of the Assets, Liabilities, and Shareholders’ Equity accounts due to the errors?


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  • CreatedJuly 08, 2015
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