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Financial Accounting in the Correction of Journal Errors

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Correcting Entries:
The following errors were made in journalizing and posting transactions in May in the Unruh Company.

1. An $800 payment for repairs incurred on account and properly recorded in April was debited to Repair Expense $800 and credited to Cash $800.

2. A collection of $2,000 on account from a customer was recorded as a debit to Cash $200 and a credit to Accounts Receivable $200.

3. A bill for $650 for new office equipment was debited to Office Supplies $560 and credited to Accounts Payable $560.

4. The receipt of $600 from a customer for future service was recorded as a debit to Accounts Receivable $600 and a credit to Service Revenue $600.

Prepare the correcting entries at May 31 assuming the incorrect entry is not reversed. (Omit explanations.)

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Solution Preview

Hi there,
<br>1. Note, if this payment was made on account, then no cash would have left the premises. The correct entry would have been:
<br>DR: Repairs expense $800
<br>CR: Accounts Payable $800
<br>But first, one needs to reverse the entry ...

Solution Summary

This question involves the fundamentals of accounting