Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. What entry is required in the company's accounts?

Question

Quizplus · Accepted Answer

The original error results in an understatement of cash receipts and an understatement of sales. To correct the error, cash must be increased by the difference between the incorrect and correct amounts ($3,200 - $2,300 = $900) and sales must be increased by the same amount. Therefore, the entry required is debit Cash $900 and credit Sales $900.

Receipts from Cash Sales of $3,200 Were Recorded Incorrectly in the Cash