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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.

The following entry was made to record the purchase of $400 in equipment on account:

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The following entry was made to record the payment of $200 for advertising:

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The following entry was made to record a $600 payment to a supplier on account: images

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 $400 in equipment on account.

DateAccounts title and explanation

Post.

Ref.

Debit

($)

Credit

($)

Equipment  400 
      Supplies   400
 (To correct the error in which a purchase of  equipment was debited to  supplies)   

(Table 1)

  • Equipment is an asset and there is an increase in the value of asset. Hence, debit the equipment by $400.
  • Supplies are an asset and there is a decrease in the value of asset. Hence, credit the supplies by $400.
DateAccounts title and explanation

Post.

Ref.

Debit

($)

Credit

($)

Cash 400 
      Accounts payable  400
 (To correct the error in which a purchase 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 $400.
  • Accounts payable is a liability and there is an increase in the value of liability...

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