Final answer:
The correct entry required to fix the error of debiting repair expense and crediting cash when equipment was purchased is to debit equipment and credit repair expense, which is option C.
Step-by-step explanation:
The student's question concerns an accounting error related to the purchase of equipment and an incorrect journal entry. In accounting, when a transaction is recorded improperly, a correcting entry must be made to amend the books. Iris Company debited repair expense and credited cash when they should have debited equipment, as they purchased equipment, not incurred a repair expense. To correct this entry, the amount erroneously debited to repair expense should be credited to remove it from that account since it was not an expense. Concurrently, equipment should be debited for the same amount to reflect the correct asset acquisition. Therefore, the correct entry to rectify this situation would be to debit equipment and to credit repair expense, which is option C.
A simple way to remember this is that correcting entries always involve reversing the incorrect entry and then recording the correct entry. By crediting repair expense, we remove the cost from that account, and by debiting equipment, we properly record the asset on the company's balance sheet.