Jasmine Company received a $350 cheque from a customer for the balance due on an accounts receivable. The transaction was erroneously recorded as a debit to Cash of $530 and a credit to Service Revenue of $530. The correcting entry is
A) debit Accounts Receivable $350; credit Cash $350
B) debit Accounts Receivable $180; credit Cash $180
C) debit Service Revenue $530; credit Cash $180; credit Accounts Receivable $350
D) debit Service Revenue $530; credit Cash $350; credit Accounts Receivable $180

Question

Quizplus · Accepted Answer

The original entry incorrectly credited Service Revenue instead of Accounts Receivable and recorded the wrong amount. The correcting entry should reverse the incorrect credit to Service Revenue and correctly credit Accounts Receivable for $350, while also adjusting the Cash account by $180 to reflect the correct amount received.

Jasmine Company Received a $350 Cheque from a Customer for the Balance