Question

In your trial balance, total debits are $264,000 and total credits are $259,500. You have determined that the error may be a transposition and that you may find the error by investigating accounts with balances for which the difference between the first two digits is 5. Which of the following account could be the problem?

Answer 1

The discrepancy in the trial balance may have been caused by a transposition error. Since the difference is $4,500, looking for an account with a balance where the first two digits differ by 5, after being swapped, would likely uncover the error.

Step-by-step explanation:

The student's question involves identifying an error in a trial balance, which may be caused by a transposition error. Since the difference between the total debits ($264,000) and total credits ($259,500) is $4,500, and we are instructed to look for accounts with balances where the difference between the first two digits is 5, it's likely that a transposition error has occurred in an account balance.

The error could be that two digits have been swapped during data entry. For example, instead of entering $54,000 correctly, it may have been entered as $45,000.

The difference between these two numbers is the $9,000 we are seeing in the discrepancy divided by 2, because the transposition error would be double-counted: once in the debits and once in the credits.