The accountant for Wade Inc.prepared the bank reconciliation when the December 31 bank statement was received in the mail.The accountant discovered an error when preparing the reconciliation.A check received from Susan Akins,a customer,as payment on her account in the amount of $120 was recorded in the company's books at $210.How would the company record the required adjusting entry for this item?
A)Debit Cash for $90 and credit Accounts Payable- Susan Akins for $90.
B)Debit Cash for $90 and credit Accounts Receivable - Susan Akins for $90.
C)Debit Accounts Payable - Susan Akins for $90 and credit Cash for $90.
D)Debit Accounts Receivable - Susan Akins for $90 and credit Cash for $90.
E)Debit Cash for $210,debit Accounts Receivable - Susan Akins for $120,and credit NSF Check Expense for $90.

Question

Quizplus · Accepted Answer

The error was made in recording the check received from a customer, so it should be adjusted in the Accounts Receivable account. The correct amount of the check received is $120, which is less than the amount recorded in the books, so Cash should be debited for the correct amount received ($120) and Accounts Receivable - Susan Akins should be credited for the same amount ($120). Therefore, the adjusting entry should be Debit Accounts Receivable - Susan Akins for $90 and credit Cash for $90. Option D correctly represents this entry.

The Accountant for Wade Inc