Question

At Creighton Company, the following errors were discovered after the transactions had been journalized and posted.

1. A collection on account from a customer for $1,000 was recorded as a debit to Cash $1,000 and a credit to Service Revenue $1,000.
2. The purchase of store supplies on account for $1,170 was recorded as a debit to Supplies $1,710 and a credit to Accounts Payable $1,710.

Answer 1

Correcting Creighton Company's accounting errors involves making adjusting entries that accurately reflect the collection from a customer and the purchase of supplies on account.

Step-by-step explanation:

The student's question pertains to correcting journal entry errors that were made in the accounting records of Creighton Company. To address the errors, the following adjustments should be made:

1. For the incorrect recording of a collection on account, which was erroneously credited to Service Revenue instead of Accounts Receivable, a correcting entry should debit Service Revenue and credit Accounts Receivable for $1,000.
2. The second error involves the incorrect amount being entered for the purchase of store supplies on account. The correct entry should reverse the incorrect amounts by debiting Accounts Payable and crediting Supplies for the difference of $540 ($1,710 - $1,170), then record the proper amount by debiting Supplies and crediting Accounts Payable for $1,170.

By making these adjustments, the entries in the accounting records will reflect the actual transactions correctly.