Betty Wright, CPA, was asked by the controller of Gore Company to review the accounting records before financial statements are prepared. Betty reviewed the records and found three errors.
1. Cash paid on accounts payable for $910 was recorded as a debit to Accounts Payable $190 and a credit to Cash $190.
2. The purchase of supplies on account for $500 was debited to Equipment $500 and credited to Accounts Payable $500.
3. The company paid dividends $1,500. The bookkeeper debited Accounts Receivable for $150 and credited Cash $150.
Instructions
Prepare an analysis of each error showing the
(a) incorrect entry.
(b) correct entry.
(c) correcting entry.

Question

Quizplus · Accepted Answer

The Answer of Betty Wright, CPA, was asked by the controller of Gore Company to review the accounting records before financial statements are prepared. Betty reviewed the records and found three errors.
1. Cash paid on accounts payable for $910 was recorded as a debit to Accounts Payable $190 and a credit to Cash $190.
2. The purchase of supplies on account for $500 was debited to Equipment $500 and credited to Accounts Payable $500.
3. The company paid dividends $1,500. The bookkeeper debited Accounts Receivable for $150 and credited Cash $150.
Instructions
Prepare an analysis of each error showing the
(a) incorrect entry.
(b) correct entry.
(c) correcting entry.

Betty Wright, CPA, Was Asked by the Controller of Gore