2 years, 9 months ago
I have an accounting assignment and theres a question that I dont know how to do, can someone help me?
Perry Company has employed a bookkeeper who is inexperienced. On December 27, after reviewing the records for the year, you discover the following error.
On July 31, Perry Company paid a supplier $190 on account. The bookkeeper recorded this by debiting Supplies $910 and crediting Accounts Payable for $910.
Required:
Prepare a correcting entry on December 27. Make sure to enter the day for each separate transaction.
On July 31, Perry Company paid a supplier $190 on account. The bookkeeper recorded this by debiting Supplies $910 and crediting Accounts Payable for $910.
Required:
Prepare a correcting entry on December 27. Make sure to enter the day for each separate transaction.
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M$1 Answer
I'd say you have to debit Accounts Payable $720 to compensate for the error made when crediting Accounts Payable $910 instead of the $190 that should have been credited (910-720=190). Then credit supplies $720 to once again compensate for the error of debiting $910 for supplies. The credit to supplies will bring the correct balance of supplies to $190 debit.
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M$
How sure are you about this? I'm suspicious of that answer because the last bit of the instructions read "Make sure to enter the day for each separate transaction." Which I take to mean that this is a multi-step fix.
hmm, that's true, could be. I'm using my best intuition here on this one. I'm thinking he journal entry made, the erroneous one was
July 31 Supplies $910 (debit)
Accounts Payable $910 (credit)
My entry was
December 27 Accounts Payable $720 (debit)
Supplies $720 (credit)
If they paid with cash there would be a transaction for cash, but that isn't the case. I can only see those two accounts being involved.