Question

Transaction Recording

a. Henry Associates paid $490 on account for an earlier purchase Purchases journal .
of merchandise inventory
b. Recorded depreciation expense for the month. Cash payments journal
c. Collected interest revenue. Cash receipts journal
d. Sold merchandise inventory on account. Cash receipts journal
e. Issued check no. 535 for purchase of merchandise inventory. Purchases journal
f. Returned damaged inventory that was purchased on account. Purchases journal
g. Sold merchandise inventory for cash. Sales journal
For each transaction listed, identify the recording error and indicate the journal that should have been used.

Answer 1

a. Henry Associates paid $490 on account for an earlier purchase of merchandise inventory.

Recording error ⇒ This is a cash payment and so should go to Cash Payment journal.

b. Recorded depreciation expense for the month.

Recording error ⇒ This is an expense entry for adjustment which means that it should be in the General journal.

c. Collected interest revenue. Cash receipts journal

Recording error ⇒ Correctly recorded.

d. Sold merchandise inventory on account.

Recording error ⇒ This is a sale so should go to the Sales Journal.

e. Issued check no. 535 for purchase of merchandise inventory.

Recording error ⇒ This is a payment by cash so this should go to the Cash payment journal.

f. Returned damaged inventory that was purchased on account.

Recording error ⇒ This goes to the General journal as a debit memo.

g. Sold merchandise inventory for cash.

Recording error ⇒ The Sales journal is for sales on account but this is a cash sale so it should go to the Cash sales journal.