Eastwood Post Pavillion received a $650 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $560 and a credit to Service Revenue $560. The correcting entry is
A) debit Cash $650; credit Accounts Receivable $650.
B) debit Cash $90 and Accounts Receivable $560; credit Service Revenue $650.
C) debit Cash $90 and Service Revenue $560; credit Accounts Receivable $650.
D) debit Accounts Receivable $650; credit Cash $90 and Service Revenue $560.

Question

Quizplus · Accepted Answer

The correct entry needs to increase Cash by the $90 underreported amount and correct the Service Revenue by debiting it $560 to reverse the initial error, while crediting Accounts Receivable $650 to reflect the payment received.

Eastwood Post Pavillion Received a $650 Check from a Customer