Andy Richter Company discovered the following errors that were made in January
A payment of Salaries and Wages Expense of $ was debited to Equipment and credited to Cash,
both for $ Andy Richter recorded $ of depreciation on this "equipment".
A collection of $ from a client on account was debited to Cash $ and credited to Service
Revenue $
The purchase of equipment on account for $ was debited to Supplies $ and credited to
Accounts Payable $
The purchase of Inventory for $ cash was debited to Prepaid Insurance and credited to Cash. At
yearend, $ of the "prepaid insurance" was recorded as insurance expense.
Instructions:
a Correct the errors by reversing the incorrect entry and preparing the correct entry.
b Correct the errors without reversing the incorrect entry.
Challenge Exercise Solution
a
Cash
Equipment
Salaries and Wages Expense
Cash.
Accumulated DepreciationEquipment
Depreciation Expense
Service Revene
Cash.
Cash.
Accounts Receivable.
Accounts Payable
Supplies
Equipment
Accounts Payable.
