While performing its monthly bank reconciliation, the bookkeeper for the Partin Company discovered that a check written for $421 for advertising expense was recorded in the firm's books as $241. Which of the following shows the effect of the correcting entry on the financial statements?

Question

Quizplus · Accepted Answer

Since the check was recorded for less than the actual amount, there is too little expense recorded on the income statement. By increasing the advertising expense by the difference, net income will decrease. Additionally, since the expense was originally recorded for less than the actual amount, there will be an adjustment to the balance sheet to increase the accounts payable account. Choice B correctly reflects these effects.

While Performing Its Monthly Bank Reconciliation, the Bookkeeper for the Partin