Error Correction

M2 Assignment

Module 02 Assignment
Instructions: Complete a brief analysis of what the current account balances are, and what they
should be according to Margaret’s CPA. Complete column G (Difference Analysis).
Mags and Bags				Mags and Bags		Difference Analysis
Trial Balance				Trial Balance-CPA Version
Account Number	Account	Debit	Credit	Debit	Credit
101	Checking	10,000		10,080
105	Accounts Receivable (A/R)	4,200		4,600		-400
115	Merchandise Inventory	15,000		14,800		200
125	Prepaid Insurance	6,000		6,000
135	Vehicle	25,000		25,000
137	Accumulated Depreciation		5,000		5,000
201	Accounts Payable (A/P)		2,200		2,200
205	Loan Payable		0		0
301	Common Stock		37,520		37,520
318	Retained Earnings		12,000		12,000
401	Sales		26,000		26,400	-400
501	Cost of Goods Sold	13,000		13,200		-200
601	Advertising	2,500		2,500
603	Bank Charges	60		60
607	Depreciation Expense	5,000		5,000				EXAMPLE Sale on Account:		Debit	Credit
609	Freight & Delivery	130		280				Accounts Receivable		100
611	Insurance	0		0				Sales			100
621	Office Supplies	248		0				Cost of Goods Sold		50
625	Repair & Maintenance	140		60				Merchandise Inventory			50
627	Shipping and delivery expense	592		442				***Hint: Cost of goods sold is half of the selling price of inventory
629	Stationery & Printing	500		748
633	Telephone Expense	120		200
635	Utilities	230		150
		82,720	82,720	83,120	83,120
Address the following questions fully and completely. Use the details of your analysis above to
justify your responses. Write in complete sentences, and pay attention to spelling and grammar.

Q1: Identify which accounts are in error, and how they are related to each other. 1. AR 400 too low, Sales 400 too low, COGS 200 too low, Merchandise Inventory 200 too high. 2. 3. 4. 5.

Q4: Draft a brief response to Margaret sharing your findings and plan for how you will correct the errors in the computerized accounting software. Be specific in your findings and recommendations for correction. Include suggestions for how these types of errors can be avoided in the future.

Q2: Discuss the likely causes of the errors (omission, duplication, incorrect transaction date, etc.). 1. Sale on account missing or misdated. 2. 3. 4. 5.

Q3: Looking forward, what tools will you use and actions will you take to ensure these errors don’t continue to be an issue in the company records?

Step 1: Calculate the differences between the trial balances for Mags and Bags and the CPA's version of the trial balance. Cash has been done for you as an example. Step 2: Any accounts with differences indicate an error exists in the account. Locate which accounts have errors in the same amount- they are usually tied to ONE error. HINT: There are 12 accounts in error. All other accounts will have 0 differences. Step 3: Address the questions in the text boxes below.

There are 5 distinct errors. Four of those errors impact 2 accounts, the other error impacts 4 accounts. Specifically identify the errors. The error impacting 4 accounts has been DONE FOR YOU to model the expectations for questions 1 and 2.

Remember to address this response to Margaret, and use your professional communication skills! Specifically mention each of the errors and how you will correct them. Also include suggestions for how to avoid errors in the future. Review the grading rubric for requirements and ensure you're meeting expectations for the grade you desire!

This is a more holistic question with a generalized answer.

Specify the likely cause of error for each individual error noted in Q1.