GSLC Forum Information

Course ID : ACCT6300
Course Name : Introduction to Accounting
Teaching Week : 3 – Session 6
Date of Class : Monday, 11 October 2021
Date of Latest Respond : Monday, 18 October 2021
Book Reference : Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso (2018).
Financial Accounting with International Financial Reporting
Standards. Hoboken: John Wiley & Sons, Inc.

Chapter 4: Completing the Accounting Cycle

1. Prepare correcting entries.

Natt Spa discovered the following errors made in January 2020.
- A payment of Salaries and Wages Expense of €700 was debited to Equipment
and credited to Cash, both for €700.
- A collection of €1,500 from a client on account was debited to Cash €150 and
credited to Service Revenue €150.
- The purchase of equipment on account for €670 was debited to Equipment €760
and credited to Accounts Payable €760.

Instructions:
a. Correct the errors by reversing the incorrect entry and preparing the correct entry.
b. Correct the errors without reversing the incorrect entry.

2. Analyze errors and prepare correcting entries and trial balance.

Horace Culpepper, CA, was retained by Pulsar Cable to prepare financial statements
for April 2020. Horace Culpepper found the following errors.
a. Cash received from a customer on account was recorded as £950 instead of
£590.
b. A payment of £75 for advertising expense was entered as a debit to
Miscellaneous Expense £75 and a credit to Cash £75.
c. The first salary payment this month was for £1,900, which included £700 of
salaries payable on March 31. The payment was recorded as a debit to Salaries
and Wages Expense £1,900 and a credit to Cash £1,900. (No reversing entries
were made on April 1.)
d. The purchase on account of a printer costing £310 was recorded as a debit to
Supplies and a credit to Accounts Payable for £310.

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083

 e. A cash payment of repair expense on equipment for £96 was recorded as a
debit to Equipment £69 and a credit to Cash £69.

Horace accumulated all the ledger balances per Pulsar’s records and found the
following.

Instructions:
a. Prepare an analysis of each error showing
(1) the incorrect entry
(2) the correct entry
(3) the correcting entry
Items 4 and 5 occurred on April 30, 2020.

b. Prepare a correct trial balance.

Trial balance £22,890

Adelia Yulma Budiarto, S.A, MSc. – ACCT6083