Question

Cooper Company has employed a bookkeeper who is inexperienced. On December 26, after reviewing the records for the year, you discover the following error. On June 1, Cooper Company paid a supplier $300 on account. The bookkeeper recorded this by debiting Cash for $300 and crediting Accounts Payable for $300.

Required: Prepare a correcting entry on December 26. Make sure to enter the day for each separate transaction.

Answer 1

The correcting Journal entry is as follows:

On December 26,

Accounts payable A/c Dr. $600

To cash A/c $600

(To record the correct entry )

Working notes:

Correct entry:

Accounts payable A/c Dr. $300

To cash $300

Wrong entry:

Cash A/c Dr $300

To Accounts payable $300

Hence the above correcting entry by debiting Accounts Payable $600 and crediting cash $600 to get the correct net effect of debit to Accounts Payable $300 and credit to cash $300.