Lisa Ortega Case Summary
ACC557
Lisa Ortega is the president of Ortega Riding Academy, Inc. The company’s primary source of revenue comes from riding fees and lesson fees, which are paid on a cash basis. The company also board gorses for owners in which they are billed in turn for their monthly boarding fees. The company has hired a new inexperienced bookkeeper. There were several mistakes made during the general journal entries made by the bookkeeper. The first error was on May 7, it should have read debit unearned revenue and credit riding revenue for $300. The next error was on May 14 there was a clerical error of $80 for a debit to riding equipment in which it should have read debit of $800. On May 20 there another clerical error of a debit to cash $148 instead of $184. The last error was for hay and feed expense it should have been a debit to hay and feed supply for $1,700 and a credit to accounts payable for $1,700 not to the cash account for $1,700. …show more content…
The fact that the accounts were incorrect in which were to be debited and credited would have made the trial balance not balance. Also, the errors in the dollar values within the accounts to be credited and debited would have played a major part in the trial balance being unbalanced. The net income for the Ortega Riding Academy, Inc. would have been $9.00 based on the information that was provided within the journal entries posted. The total ending balance for the cash account would have been $17,234.00 after adding the earned revenues and subtracting the
Lisa Ortega is the president of Ortega Riding Academy, Inc. The company’s primary source of revenue comes from riding fees and lesson fees, which are paid on a cash basis. The company also board gorses for owners in which they are billed in turn for their monthly boarding fees. The company has hired a new inexperienced bookkeeper. There were several mistakes made during the general journal entries made by the bookkeeper. The first error was on May 7, it should have read debit unearned revenue and credit riding revenue for $300. The next error was on May 14 there was a clerical error of $80 for a debit to riding equipment in which it should have read debit of $800. On May 20 there another clerical error of a debit to cash $148 instead of $184. The last error was for hay and feed expense it should have been a debit to hay and feed supply for $1,700 and a credit to accounts payable for $1,700 not to the cash account for $1,700. …show more content…
The fact that the accounts were incorrect in which were to be debited and credited would have made the trial balance not balance. Also, the errors in the dollar values within the accounts to be credited and debited would have played a major part in the trial balance being unbalanced. The net income for the Ortega Riding Academy, Inc. would have been $9.00 based on the information that was provided within the journal entries posted. The total ending balance for the cash account would have been $17,234.00 after adding the earned revenues and subtracting the