In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $970 but was erroneously entered into the accounting records as $790.The journal entry to adjust the books for the bank reconciliation would include a debit to:
A)Cash and a credit to Utility Expense for $180.
B)Utility Expense and a credit to Cash for $180.
C)Utility Expense and a credit to Cash for $790.
D)Cash and a credit to Utility Expense for $790.

Question

Quizplus · Accepted Answer

When this check was originally recorded,the Cash account was decreased by $790 rather than $970 and,as such,the Cash account is overstated by $180 (or $970 − $790 = $180).To correct the error,the journal entry must include a debit to Utilities Expense and a credit to Cash for $180.

In Comparing the Canceled Checks on the Bank Statement with the Entries