An examination of the accounts of Savage Company for the month of June revealed the following errors after the transactions were journalized and posted.
1. A check for $800 from R. Wright, a customer on account, was debited to Cash $800 and credited to Service Revenue, $800.
2. A payment for Advertising Expense costing $630 was debited to Utilities Expense, $360 and credited to Cash $360.
3. A bill for $850 for Supplies purchased on account was debited to Equipment, $580 and credited to Accounts Payable $580.
Instructions
Prepare correcting entries for each of the above assuming the erroneous entries are not reversed. Explain how the transaction as originally recorded affected net income for the month of June.

Question

Quizplus · Accepted Answer

The Answer of An examination of the accounts of Savage Company for the month of June revealed the following errors after the transactions were journalized and posted.
1. A check for $800 from R. Wright, a customer on account, was debited to Cash $800 and credited to Service Revenue, $800.
2. A payment for Advertising Expense costing $630 was debited to Utilities Expense, $360 and credited to Cash $360.
3. A bill for $850 for Supplies purchased on account was debited to Equipment, $580 and credited to Accounts Payable $580.
Instructions
Prepare correcting entries for each of the above assuming the erroneous entries are not reversed. Explain how the transaction as originally recorded affected net income for the month of June.

An Examination of the Accounts of Savage Company for the Month