Question

The following errors took place in journalizing and posting transactions:

a. Cash of $8,800 received on account was recorded as a debit to Fees Earned and a credit to Cash.
b. A $1,760 purchase of supplies for cash was recorded as a debit to Supplies Expense and a credit to Accounts Payable.
Journalize the entries to correct the errors.

Answer 1

To rectify the errors in the provided transactions, incorrect entries must first be reversed and then the accurate entries should be recorded. Two corrected journal entries are provided for the two instances of error.

Step-by-step explanation:

To correct the errors in journalizing and posting the transactions, we need to reverse the incorrect entries and record the correct ones. Here are the correct journal entries:

• To correct error (a), where cash received on account was mistakenly debited to Fees Earned:
  
  1. Debit Cash $8,800
  2. Credit Fees Earned $8,800
  3. Debit Accounts Receivable $8,800
  4. Credit Cash $8,800
• To correct error (b), where a cash purchase of supplies was incorrectly recorded as Accounts Payable:
  
  1. Debit Supplies Expense $1,760
  2. Credit Accounts Payable $1,760
  3. Debit Supplies $1,760
  4. Credit Cash $1,760

This will negate the wrong transactions and input the correct transactions in the accounts affected.

Answer 2

a. To correct the error of recording cash received on account, journalize a debit entry to Cash and a credit entry to Accounts Receivable for $8,800.

b. To rectify the error in recording a cash purchase of supplies, journalize a debit entry to Supplies and a credit entry to Cash for $1,760.

Step-by-step explanation:

In the first scenario, where cash of $8,800 received on account was incorrectly recorded as a debit to Fees Earned and a credit to Cash, the correction involves reversing these entries. A debit entry to Cash and a credit entry to Accounts Receivable for $8,800 will accurately reflect the transaction, ensuring proper accounting for the cash received on account.

For the second error, where a $1,760 purchase of supplies for cash was erroneously recorded as a debit to Supplies Expense and a credit to Accounts Payable, the correction requires a debit entry to Supplies and a credit entry to Cash for $1,760. This adjustment rectifies the misclassification, accurately reflecting the cash purchase of supplies.

Correcting these journal entries is essential to maintain accurate financial records and uphold the integrity of the accounting system. Identifying and rectifying errors promptly ensures that financial statements provide a true and fair representation of the company's transactions and financial position. It also ensures compliance with accounting principles and standards, supporting sound financial management and decision-making.