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Entries to correct errors The following errors took place in journalizing and posting transactions: a. Insurance of $18,000 paid for the current year was recorded as a debit to Insurance Expense and a credit to Prepaid Insurance. b. A withdrawal of $10,000 by Brian Phillips, owner of the business, was recorded as a debit to Wages Expense and a credit to Cash. Journalize the entries to correct the errors. Omit explanations.

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Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

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Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
Chapter 2, Problem 2.21EX
Textbook Problem
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Entries to correct errors

The following errors took place in journalizing and posting transactions:

a.    Insurance of $18,000 paid for the current year was recorded as a debit to Insurance Expense and a credit to Prepaid Insurance.

b.    A withdrawal of $10,000 by Brian Phillips, owner of the business, was recorded as a debit to Wages Expense and a credit to Cash.

Journalize the entries to correct the errors. Omit explanations.

a.

To determine

Errors not affecting trial balance:

An error is a mistake committed in the process of book-keeping or in accounting.  In some cases, errors may occur but, they will not affect the totals of the trial balance. Such an error can be found while preparing the trial balance or would be indicated by the unusual account balance. For Example, Crediting land account. If such errors have already been journalized, and posted to the ledger, then they should be corrected by preparing a correcting journal entry.

To journalize: The entries to correct the errors.

Explanation of Solution

  • In the first entry, the incorrect entry of debit to insurance expense account, and credit to prepaid expense account are reversed.
  • In the second entry, the correct entry is recorded...

b.

To determine

To journalize: The entries to correct the errors.

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Chapter 2 Solutions

Accounting
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