The trial balance of XYZ Ltd. shows the following balances (in Naira):\nCash $120,000$ debit\nAccounts Receivable $85,000$ debit\nInventory $150,000$ debit\nEquipment $200,000$ debit\nAccumulated Depreciation—Equipment $30,000$ credit\nAccounts Payable $70,000$ credit\nCapital $435,000$ credit\nDrawings $40,000$ debit\nSales $250,000$ credit\nPurchases $180,000$ debit\nRent Expense $25,000$ debit\nThe total of the debit side exceeds the credit side by $N15,000$. It is known that depreciation expense for the year was omitted. The equipment was purchased at the beginning of the year for $N200,000$ and is depreciated on a straight‑line basis over 5 years with a residual value of $N50,000$. Determine the depreciation expense that should be recorded and state whether the trial balance will balance after recording it.

Question

The trial balance of XYZ Ltd. shows the following balances (in Naira):\nCash $120,000$ debit\nAccounts Receivable $85,000$ debit\nInventory $150,000$ debit\nEquipment $200,000$ debit\nAccumulated Depreciation—Equipment $30,000$ credit\nAccounts Payable $70,000$ credit\nCapital $435,000$ credit\nDrawings $40,000$ debit\nSales $250,000$ credit\nPurchases $180,000$ debit\nRent Expense $25,000$ debit\nThe total of the debit side exceeds the credit side by $N15,000$. It is known that depreciation expense for the year was omitted. The equipment was purchased at the beginning of the year for $N200,000$ and is depreciated on a straight‑line basis over 5 years with a residual value of $N50,000$. Determine the depreciation expense that should be recorded and state whether the trial balance will balance after recording it.

Accepted Answer

Depreciation expense = N30,000; trial balance will still not balance (debit excess remains N15,000)

Neco Model Questions Vol1 2020 Financial Accounting Question 19

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