Question

Geyer Company has the following account balances: Accounts Receivable: $40, Accounts Payable: $45, Cash: $70 and Notes Payable: $65. If the Notes Payable balance is listed as $56 in the trial balance, what impact will this have on the accounts

Answer 1

Credit side of the trial balance will be understated by $9

Step-by-step explanation:

Note Payable has a credit balance of $ 65 by writing it as $56 it will understate the total credit value by $9 ( 65 - 56 ). Trial will be imbalanced. Ultimately the Balance sheet will not balance, it will show $9 more assets than the total equity and liabilities. The note payable is recorded in the liabilities section of the balance sheet which will be a cause of imbalance of balance sheet too.