Oluwatobi Logistics Enterprise initially extracted a trial balance with total debit balanc… — JAMB UTME

Oluwatobi Logistics Enterprise initially extracted a trial balance with total debit balances of $₦450,000$ and total credit balances of $₦450,000$ . A subsequent audit revealed the following accounting errors before final financial statements were drawn:

1. Discount allowed of $₦12,000$ recorded in the cash book was mistakenly posted to the credit side of the Discount Received account in the ledger instead of the debit side of the Discount Allowed account.
2. The credit purchase of a delivery motor vehicle costing $₦80,000$ was posted to the debit of the Purchases account instead of the Motor Vehicles account.
3. A trade debtor's debit balance of $₦15,000$ was completely omitted during the extraction of balances into the trial balance.

What is the corrected total of the debit column of the trial balance after rectifying these entries?

₦477,000Answer
B
₦465,000
C
₦557,000
D
₦447,000

Answer

The corrected total of the debit column of the trial balance is ₦477,000.

The initial debit total of ₦450,000 is updated by taking into account the net effect of all three items. First, Discount Allowed is an expense and carries a debit balance, so omitting its ledger balance reduced the debit total by ₦12,000; adding it back increases the total. Second, reclassifying the ₦80,000 capital expenditure from Purchases (debit) to Motor Vehicles (debit) is a debit-for-debit swap, causing zero net change to the total debit column. Third, the omitted debtor balance of ₦15,000 is an asset with a debit balance, so including it increases the debit column total by ₦15,000. Therefore, the revised total debit column equals ₦450,000 + ₦12,000 + ₦15,000 = ₦477,000.

Step-by-Step Solution

Analyze the impact of the Discount Allowed posting error on the Trial Balance debit column.

Discount Allowed is an expense account with a debit balance. Since ₦12,000 was omitted from the debit side of Discount Allowed, correcting this increases the Trial Balance debit total by ₦12,000.

Discount allowed must be posted to the debit side of its designated ledger account.

Analyze the impact of the Motor Vehicle misclassification error on the Trial Balance debit column.

Transferring ₦80,000 from Purchases (a debit balance expense account) to Motor Vehicles (a debit balance asset account) results in a net change of ₦0 to the debit total.

Both Purchases and Motor Vehicles are accounts that carry debit balances in the trial balance.

Analyze the impact of the omitted debtor balance on the Trial Balance debit column.

Adding the omitted trade debtor balance increases the debit column total by ₦15,000.

Debtors represent assets and must be listed on the debit side of the trial balance.

Compute the revised total for the debit column of the trial balance.

Revised Debit Total = ₦450,000 + ₦12,000 + ₦0 + ₦15,000 = ₦477,000.

Summing the initial total and all adjustments gives the corrected debit column total.

Key Concept

Impact of ledger balancing and error correction on Trial Balance extraction totals

Estimated Time:3m 0s

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