Question

Question 2

(20 marks)

Required:

1. Prepare a single journal entry, with explanation, for each of the following transactions to correct the error made:

1. Debited office furniture and credited accounts payable regarding a $ 6,000 purchase of computer equipment on account.
2. Accrued a $ 12,000 bonus by debiting salary expense and crediting accounts payable.
3. Adjusted prepaid advertising by debiting prepaid advertising and crediting advertising expense for $ 3,000. This adjusting journal entry should have debited advertising expense and credited prepaid advertising for $ 3,000.
4. Debited accounts receivable and credited revenue $ 5,000 for work not yet performed.
5. Debited amortization expense and credited computer equipment $ 4,000 when recording the amortization expense.

2. Prepare two journal entries, with explanation, for each of the above transactions to correct the error made.

Answer 1

Answer:

A.Computer Equipment a/c              Dr. 6000

   To Office Furniture

(Computer Equipment asset created instead of Office Furniture)

B.Accounts Payable a/c                 Dr. 12000

         To Bonus Payable                              12000

(Bonus accrued liability created)

C.Advertising Expense a/c               Dr.6000

         To Prepaid Advertising                        6000

(Advertising expense incorrectly recorded now corrected)

D.Revenue a/c                     Dr.            5000

         To Accounts Receivable                      5000

(Incorrect entry reversed)

E.Depreciation Expense a/c         Dr.   4000

         To Accum. Depre - Comp. Equip         4000

(Actual entry passed)

Computer Equipment a/c              Dr. 4000

         To Amortization expense                 4000

(Error corrected)