An examination of the accounts of Salvage Company for the month of June revealed the following errors after the transactions were journalized and posted.
1. A check for $950 from S. Wilde, a customer on account, was debited to Cash $950 and credited to Service Revenue, $950.
2. A payment for Advertising Expense costing $720 was debited to Utilities Expense, $270 and credited to Cash $270.
3. A bill for $950 for Supplies purchased on account was debited to Equipment, $590 and credited to Accounts Payable $590.
Instructions
Prepare correcting entries, with explanations, 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 Salvage Company for the month of June revealed the following errors after the transactions were journalized and posted.
1. A check for $950 from S. Wilde, a customer on account, was debited to Cash $950 and credited to Service Revenue, $950.
2. A payment for Advertising Expense costing $720 was debited to Utilities Expense, $270 and credited to Cash $270.
3. A bill for $950 for Supplies purchased on account was debited to Equipment, $590 and credited to Accounts Payable $590.
Instructions
Prepare correcting entries, with explanations, 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 Salvage Company for the Month