Solved: Which error affect the income statement, Accounting Basics

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Which error affect the income statement

Response to the following problem:

Assume that Western Realty Co. borrowed $200,000 from Mountain First Bank and Trust. In recording the transaction, Western erroneously recorded the receipt as a debit to Cash, $200,000, and a credit to Fees Earned, $200,000.

(a) How would this error affect the equality of the trial balance?

(b) How would this error affect the income statement retained earnings statement, and balance sheet?

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Accounting Basics: Which error affect the income statement

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