A purchase of $1,600 of supplies for cash was incorrectly journalized and posted as a $1,600 debit to Supplies Expense and a $1,600 credit to cash. The entry to correct this error is

Question

Quizplus · Accepted Answer

The incorrect journal entry has increased the expense and decreased the asset. To correct this error, we need to increase the asset and decrease the expense. Therefore, we need to debit Supplies on Hand (an asset account) by $1,600 to increase the asset and credit Supplies Expense (an expense account) by $1,600 to decrease the expense.

A Purchase of $1,600 of Supplies for Cash Was Incorrectly