A credit customer paid $200 to Iron Works Company to reduce the customer's outstanding balance.However,Iron Works Company erroneously increased sales.Which of the following is the correcting entry to be made?
A)
$\begin{array}{lll}
& \mathrm{Dr.}& \mathrm{Cr.}\
\text {Accounts Receivable } & 200 & \
\text { Sales } & &200\
\end{array}$
B)
$\begin{array}{lll}
& \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash } & 200 & \
\text {Accounts Receivable } & &200\
\end{array}$

C)
$\begin{array}{lll}
& \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash } & 200 & \
\text { Accounts Receivable } & &200\
\end{array}$

D)
$\begin{array}{lll}
& \mathrm{Dr.}& \mathrm{Cr.}\
\text {Sales } & 200 & \
\text { Accounts Receivable } & &200\
\end{array}$

E)
$\begin{array}{lll}
& \mathrm{Dr.}& \mathrm{Cr.}\
\text {Sales} & 200 & \
\text { Cash } & &200\
\end{array}$

Question

A credit customer paid $200 to Iron Works Company to reduce the customer's outstanding balance.However,Iron Works Company erroneously increased sales.Which of the following is the correcting entry to be made? 
A) 
$\begin{array}{lll}
 & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Accounts Receivable  } & 200 & \
\text { Sales  } & &200\
\end{array}$
B)
$\begin{array}{lll}
 & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash  } & 200 & \
\text {Accounts Receivable  } & &200\
\end{array}$

C)
$\begin{array}{lll}
 & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Cash  } & 200 & \
\text {   Accounts Receivable } & &200\
\end{array}$

D)
$\begin{array}{lll}
 & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Sales  } & 200 & \
\text { Accounts Receivable   } & &200\
\end{array}$

E)
$\begin{array}{lll}
 & \mathrm{Dr.}& \mathrm{Cr.}\
\text {Sales} & 200 & \
\text { Cash } & &200\
\end{array}$

Quizplus · Accepted Answer

Since the customer paid $200 to reduce their outstanding balance, it should be credited to their account (Accounts Receivable) to reflect a decrease in their balance. However, Iron Works Company erroneously increased sales, which means that the amount was incorrectly recorded as revenue. Therefore, Sales must be debited to reduce revenue by $200. The correcting entry should be:

Dr. Sales $200
    Cr. Accounts Receivable $200

A Credit Customer Paid $200 to Iron Works Company to Reduce