The following errors took place in journalizing and posting transactions:
a. The receipt of $8,400 for services rendered was recorded as a debit to Accounts Receivable and a credit to Fees Earned.
b. The purchase of supplies of $2,500 on account was recorded as a debit to Office Equipment and a credit to Supplies.
Journalize the entries to correct the errors. Omit explanations.
Answer:
a.
Cash 8,400
Accounts Receivable 8,400
b.
Supplies 2,500
Office Equipment 2,500
Supplies 2,500
Accounts Payable 2,500
Note: The first entry in (b) reverses the incorrect entry, and the second entry records the correct entry. These two entries could also be combined into one entry as shown below; however, preparing two entries would make it easier for someone to understand later what happened and why the entries were necessary.
Supplies 5,000
Office Equipment 2,500
Accounts Payable 2,500