Question

What is the correct entry for the following error of the transaction

A collection on account from a customer for $780 was recorded as a debit to Cash of $780 and a credit to Service Revenue of $780.

Answer 1

The correct entry for the error in recording a collection on account would be to debit Accounts Receivable (or Customer Accounts) for the amount received and credit Cash for the same amount.

Step-by-step explanation:

The correct entry for the error in recording a collection on account would be to debit Accounts Receivable (or Customer Accounts) for $780 and credit Cash for $780.

This is because the cash was received from the customer and should be recorded as an increase in the cash account (debit) and a decrease in the accounts receivable (credit).

By making this correction, the financial statements will accurately reflect the amount owed by the customer and the cash received.