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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Correcting entries

The following errors took place in journalizing and posting transactions:

a.    Rent expense of $4,650 paid for the current month was recorded as a debit to Miscellaneous Expense and a credit to Rent Expense.

b.    The payment of $3,700 from a customer on account was recorded as a debit to Cash and a credit to Accounts Payable. Journalize the entries to correct the errors. Omit explanations.

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

a. Journalize the correcting entry to correct the error of the rent expense.

Rent expense 4,650  
     Miscellaneous expense   4,650

Table (1)

Rent expense 4,650  
     Cash   4,650

Table (2)

  • In the first entry, the incorrect entry of debit to miscellaneous expense account, and credit to rent expense account are reversed.
  • In the second entry, the correct entry is recorded.
  • Rent expense is a component of shareholder’s equity account, and it is increased, which in turn has decreased the shareholder’s equity account...

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