Question

At the end of the year, the Accumulated Depreciation – Equipment account was closed with a debit of $5,500 to Accumulated Depreciation and a credit of $5,500 to Income Summary. What entry should be made to correct this error?

Answer 1

Corrected Entry

Depreciation Expense$5,500 Dr

Income Summary $5,500 Dr

Accumulated Depreciation – Equipment $11,000 Cr

Step-by-step explanation:

Entry Posted

Accumulated Depreciation – Equipment $5,500 Dr

Income Summary $5,500 Cr

Required Entry

Depreciation Expense$5,500 Dr

Accumulated Depreciation – Equipment $5,500 Cr

Corrected Entry

Depreciation Expense$5,500 Dr

Income Summary $5,500 Dr

Accumulated Depreciation – Equipment $11,000 Cr

This entry is made to correct the actual entry done. In this entry the depreciation expense is debited and accumulated Depreciation is credited with twice the original value to counter effect the wrong entry . Also income summary is debited with the amount wrongly credited.