Question

1) Process Solutions Company received $193 from a charge customer which was recorded and posted as $391. The journal entry to correct the error is:

a) a credit to Cash for $198 and a debit to Accounts Payable for $198.

b) a debit to Cash for $391 and a credit to Accounts Receivable for $391.

c) a credit to Cash for $198 and a debit to Income from Services for $198.

d) a debit to Cash for $193 and a credit to Accounts Payable for $193.

e) a debit to Accounts Receivable for $198 and a credit to Cash for $198.

2) Lohan Company had the following account balances as of June 30.

Cash $29,000
Equipment $15,000
Accounts Payable $2,800
T. Lohan, Capital $62,700
T. Lohan, Drawing $5,000
Income from Services $35,000
Rent Expense $12,000
Salaries Expense $8,000

What is the debit balance of the trial balance?

a) $141,700

b) $136,700

c) $69,000

d) $64,000

3) Rich Company paid transport expenses of $3,000 in cash. Which of the following journal entries records this transaction?

a)Transport Expense $3,000

Cash $3,000

b) Cash $3,000

Transport Payable       $3,000

c) Prepaid Expense    $3,000

Cash $3,000

d) Transport Expense $3,000

Prepaid Expense     $3,000

4) The general ledger shows a complete record of the transactions recorded in each individual account.

False

True

Answer 1

1. Option No e is correct- a debit to Accounts receivable for $ 198 and a credit to cash for $ 198.

Workings:-

Correct entry:-	Wrong entry:-	Rectification entry:-
Cash A/c….Dr.	193	Cash A/c….Dr.	391	Accounts Receivable A/c….Dr.	198
To Accounts Receivable A/c	193	To Accounts Receivable A/c	391	To Cash A/c	198

2. Debit balance of the trial balance= $ 69000 (option c)

Workings:-

Account heads	Amt. in $
Cash	29000
Equipment	15000
T. Lohan, Drawing	5000
Rent Expense	12000
Salaries expense	8000
TOTAL	69000

3. Option a is correct.

Entry for transport expense paid in cash will be:-

Transport Expense A/c...Dr. 3000 (Since expenses paid are debited)

To Cash A/c 3000 (Cash outflow is credited since it is a decrease in asset)

(Being transport expense paid in cash)

All other entries are incorrect since they are not in line with the nature of transaction.

4. The general ledger shows a complete record of transactions recorded in each individual account-True.

All the transaction done during the period are posted to each individual general ledger account.