Tom Duran, CPA, was asked by Mike Gore to review the accounting records and prepare the financial statements for his upholstering shop. Tom reviewed the records and found three errors.
1. Cash paid on accounts payable for $930 was recorded as a debit to Accounts Payable $390 and a credit to Cash $390.
2. The purchase of supplies on account for $500 was debited to Equipment $500 and credited to Accounts Payable $500.
3. Mike withdrew $1,200 of cash and the bookkeeper debited Accounts Receivable for $120 and credited Cash $120.
Instructions
Prepare an analysis of each error showing the
(a) incorrect entry.
(b) correct entry.
(c) correcting entry.

Question

Quizplus · Accepted Answer

The Answer of Tom Duran, CPA, was asked by Mike Gore to review the accounting records and prepare the financial statements for his upholstering shop. Tom reviewed the records and found three errors.
1. Cash paid on accounts payable for $930 was recorded as a debit to Accounts Payable $390 and a credit to Cash $390.
2. The purchase of supplies on account for $500 was debited to Equipment $500 and credited to Accounts Payable $500.
3. Mike withdrew $1,200 of cash and the bookkeeper debited Accounts Receivable for $120 and credited Cash $120.
Instructions
Prepare an analysis of each error showing the
(a) incorrect entry.
(b) correct entry.
(c) correcting entry.

Tom Duran, CPA, Was Asked by Mike Gore to Review