Correcting a Mistake Made When Closing the Ledger
You have just finished your first term of 3A Accounting at H.T.S., and now your friends can't wait to take advantage of your new
accounting skills. Your friend runs her own home-based business, and has just completed the closing entries for her business
as of December 1997. She asks you to look over her books, and you immediately notice a problem with her post-closing
Trial Balance. You are then determined to discover where the root of this problem lies.
The pre-closing and the post-closing Trial Balances, as well as the closing entries, for your friend's business are presented below.
After analyzing these documents, answer the questions that follow.
|
| Account | Account # | Debit | Credit |
| Cash | 101 | $5,000.00 | |
| Supplies on Hand | 105 | 1,400.00 | |
| Equipment | 107 | 1,800.00 | |
| Automobile | 110 | 17,000.00 | |
| Bank Loan | 201 | 10,000.00 | |
| Capital | 301 | 6,500.00 | |
| Drawings | 302 | 300.00 | |
| Fees Earned | 401 | 15,000.00 | |
| Phone Expense | 501 | 700.00 | |
| Rent Expense | 505 | 5,300.00 | |
| __________ | __________ | ||
| Totals | $31,500.00 | $31,500.00 |
| Account | Account # | Debit | Credit |
| Cash | 101 | $5,000.00 | |
| Supplies on Hand | 105 | 1,400.00 | |
| Equipment | 107 | 1,800.00 | |
| Automobile | 110 | 17,000.00 | |
| Bank Loan | 201 | 10,000.00 | |
| Capital | 301 | 14,900.00 | |
| __________ | __________ | ||
| Totals | $25,200.00 | $24,900.00 |
| Dec. 31 | Fees Earned | 15,000.00 | |
| 15,000.00 | ||
| Dec. 31 | Revenue and Expense Summary | 6,300.00 | |
| 5,300.00 | ||
| 700.00 | ||
| 300.00 | ||
| Dec. 31 | Revenue and Expense Summary | 8,700.00 | |
| 8,700.00 | ||
| Dec. 31 | Capital | 300.00 | |
| 300.00 |