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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

CORRECTING ERRORS Assuming that all entries have been posted, prepare correcting entries for each of the following errors.

1. The following entry was made to record the purchase of $700 in supplies on account:

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2. The following entry was made to record the payment of $450 in wages:

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3. The following entry was made to record a $300 payment to a supplier on account:

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To determine

Prepare correcting entries for the given errors.

Explanation

Journal:

Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Ø  Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Ø  Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

1.  Prepare the correcting entry for the purchase of $700 in supplies on account.

DateAccounts title and explanation

Post.

Ref.

Debit

($)

Credit

($)

Cash 700 
      Accounts payable  700
 (To correct the error in which a purchase of  supplies on account was credited to cash)   

(Table 1)

  • Cash is an asset and there is an increase in the value of asset. Hence, debit the cash by $700.
  • Accounts payable is a liability and there is an increase in the value of liability. Hence, credit the accounts payable by $700.

2. Prepare the correcting entry for the payment of $450 in wages.

DateAccounts title and explanation

Post.

Ref...

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