A collection of an account receivable was erroneously recorded and posted as a debit to Cash and a credit to Consulting Fees Revenue. The journal entry to correct this error would be

Question

Quizplus · Accepted Answer

The error was that the account receivable was recorded as revenue, which means Consulting Fees Revenue was overstated. To correct the error, we need to decrease Consulting Fees Revenue by debiting it, and increase Accounts Receivable by crediting it. Therefore, the correct entry is a debit to Consulting Fees Revenue and a credit to Accounts Receivable, as shown in option D. Options A, B and C are not correct as they do not correct the error in the original entry.

A Collection of an Account Receivable Was Erroneously Recorded and Posted