Question

Exercise 4-12

Andrew Clark Company discovered the following errors made in January 2015 .

1. A payment of Salaries and Wages Expense of $ 823 was debited to Equipment and credited to Cash, both for $ 823 .

2. A collection of $ 2,520 from a client on account was debited to Cash $ 252 and credited to Service Revenue $ 252.

3. The purchase of equipment on account for $ 920 was debited to Equipment $ 290 and credited to Accounts Pay able $ 290.

Correct the errors by reversing the incorrect entry and preparing the correct entry.

Answer 1

	Account Titles and Explanation	Debit	Credit
1	Cash	823
	Equipment		823
	(To reverse the incorrect entry)
	Salaries and Wages expense	823
	Cash		823
	(To record the correct entry)
2	Service Revenue	252
	Cash		252
	(To reverse the incorrect entry)
	Cash	2520
	Accounts Receivable		2520
	(To record the correct entry)
3	Accounts Payable	290
	Equipment		290
	(To reverse the incorrect entry)
	Equipment	920
	Accounts Payable		920
	(To record the correct entry)
2
	Account Titles and Explanation	Debit	Credit
1	Salaries and Wages expense	823
	Equipment		823
2	Service Revenue	252
	Cash	2268
	Accounts Receivable		2520
3	Equipment	630		=920-290
	Accounts Payable		630