FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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P2-6C. Cookie Mejias, owner of Mejias Company, would like to know how each of the
following situations would affect the totals of the trial balance and individual
ledger accounts:
1. An $850 payment for a desk was recorded as a debit to Office Equipment,
$85, and a credit to Cash, $85.
2. A payment of $300 to a creditor was recorded as a debit to Accounts
Payable, $300, and a credit to Cash, $100.
3.
An Accounts Receivable collection of $400 was recorded as a debit to Cash,
$400, and a credit to C. Mejias, Capital, $400.
4. The payment of a liability of $400 was recorded as a debit to Accounts
Payable, $40, and a credit to Supplies, $40.
5.
A purchase of equipment for $800 was recorded as a debit to Supplies,
$800, and a credit to Cash, $800.
6.
A payment of $95 to a creditor was recorded as a debit to Accounts Payable,
$95, and a credit to Cash, $59.
What would you tell Cookie? Which accounts would be overstated and which
would be understated? Which would be correct? Explain in writing how mistakes
like these can be avoided.
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Transcribed Image Text:on ance P2-6C. Cookie Mejias, owner of Mejias Company, would like to know how each of the following situations would affect the totals of the trial balance and individual ledger accounts: 1. An $850 payment for a desk was recorded as a debit to Office Equipment, $85, and a credit to Cash, $85. 2. A payment of $300 to a creditor was recorded as a debit to Accounts Payable, $300, and a credit to Cash, $100. 3. An Accounts Receivable collection of $400 was recorded as a debit to Cash, $400, and a credit to C. Mejias, Capital, $400. 4. The payment of a liability of $400 was recorded as a debit to Accounts Payable, $40, and a credit to Supplies, $40. 5. A purchase of equipment for $800 was recorded as a debit to Supplies, $800, and a credit to Cash, $800. 6. A payment of $95 to a creditor was recorded as a debit to Accounts Payable, $95, and a credit to Cash, $59. What would you tell Cookie? Which accounts would be overstated and which would be understated? Which would be correct? Explain in writing how mistakes like these can be avoided.
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