Chp 15 Correction of errors

Question 1

Payment of $80 for the owner’s personal electrical bills has been debited to the electricity expense account.
Journal entry?

Answer 1

Question 2

Credit purchase of furniture costing $7 000 for office use has been recorded in the books as $700.

Answer 2

Question 3

Credit sale of $300 to Alan has been recorded on the wrong side of both sales revenue and trade receivable, Alan accounts

Answer 3

Question 4

Credit sale of $300 to Alan has been debited to Alden’s account

Answer 4

Question 5

Bank charges of $20 stated on the bank statement have not been recorded in the accounts.

Answer 5

Question 6

Repairs to vehicle of $20 has been posted to motor vehicles account.

Answer 6

Question 7

State the effect of the correction on PROFIT

Answer 7

Profit will INCREASE

(as profit has been understated)

Question 8

State the effect of the correction on profit

Answer 8

NO EFFECT (both items are not in Performance)

Question 9

State the effect of CORRECTION on PROFIT

Answer 9

Profit will be REDUCED.

(AS PROFIT HAS BEEN OVERSTATED)