Final answer:
To correct the mistake of expensing a $10,000 equipment purchase, Evans Corp. needs to debit Equipment and credit Expenses for $10,000. The correction affects the asset and expense accounts, ensuring financial statements adhere to accounting standards.
Step-by-step explanation:
When Evans Corp. incorrectly expensed a $10,000 purchase of equipment as an expense instead of capitalizing it as an asset, the company needs to correct this error in its financial statements. The correcting entry typically involves debiting the asset account for the equipment and crediting the expense account to remove the expense. Specifically, you would debit Equipment and credit Expenses for $10,000. If the error was discovered in the same year, it would be corrected in the current financial period. However, if the error was discovered in the subsequent year, the prior year's retained earnings must also be adjusted to reflect the correction.
Remember, correcting entries serves to ensure that the financial statements present a true and fair view of the company's financial position and performance. This process involves adhering to the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), depending on the regulatory framework the company follows.