Question

Adams Company has employed a bookkeeper who is inexperienced. On December 28, after reviewing the records for the year, you discover the following error.
On June 1, Adams 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 28. Make sure to enter the day for each separate transaction.

Answer 1

Answer:

                                      Debit                  Credit

Trade payable                 $300

Cash                                                           $300                              

Explanation:

First we have to reverse the wrong journal entry which has been made by the inexperienced bookkeeper in the Adams Company accounts:

                                      Debit                  Credit

Trade payable                 $300

Cash                                                           $300                              

Now we have to record the correct journal entry in the accounts of Adam Company in respect of account settlement with supplier which is given as follow:

                                      Debit                  Credit

Trade payable                 $300

Cash                                                           $300                              

Answer 2

Answer: Dr: Account payable $300, Cr: cash $300

Explanation:

General journal

Date. Description of entry. Dr. Cr

$ $

June 1 Account payable. 300

Cash. 300

Being correction of

entry for December 28

The error made by the inexperienced bookkeeper can be corrected by simply reversing the entry to record the entry correctly.