Question

Entries to Correct Errors The following errors took place in journalizing and posting transactions: Insurance of $20,000 paid for the current year was recorded as a debit to Insurance Expense and a credit to Prepaid Insurance. Dividends of $17,000 were recorded as a debit to Wages Expense and a credit to Cash. Journalize the entries to correct the errors. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

A. Dr Prepaid Insurance 40,000

Cr Insurance Expense 20,000

Cr Cash 20,000

Dr Prepaid Insurance 20,000

Cr Insurance Expense 20,000

Dr Prepaid Insurance 20,000

Cr Cash 20,000

b. Dr Dividends 17,000

Cr Wages Expense 17,000

Explanation:

Preparation of the journal entries to correct the errors.

A. Dr Prepaid Insurance 40,000

(20,000+20,000)

Cr Insurance Expense 20,000

Cr Cash 20,000

Dr Prepaid Insurance 20,000

Cr Insurance Expense 20,000

Dr Prepaid Insurance 20,000

Cr Cash 20,000

b. Dr Dividends 17,000

Cr Wages Expense 17,000