Asked by jasmine badayos on Jul 21, 2024
Verified
The purchase of supplies on account was recorded and posted as a debit to Supplies for $500 and a credit to Accounts Receivable for $500. The correcting entry would include a
A) credit to Accounts Receivable for $500
B) credit to Accounts Receivable for $1,000
C) credit to Accounts Payable for $500
D) credit to Accounts Payable for $1,000
Supplies
Items that are used in the daily operations of a business or organization, often consumed in the process.
Accounts Receivable
Receivables from customers for products or services rendered by a company, awaiting payment.
Accounts Payable
An accounting entry representing a company's obligation to pay off a short-term debt to its creditors or suppliers.
- Identify routine errors in the accounting cycle and comprehend methodologies to locate and rectify them.
Verified Answer
CM
Ceind MayanoJul 26, 2024
Final Answer :
C
Explanation :
The original entry incorrectly recorded an increase in Accounts Receivable instead of an increase in Accounts Payable. To correct this error, a credit needs to be made to Accounts Payable for the $500 that was purchased on account. Option C is the correct answer as it gives a credit to the correct account for the correct amount. Neither of the other options addresses the incorrect posting of the original entry.
Learning Objectives
- Identify routine errors in the accounting cycle and comprehend methodologies to locate and rectify them.