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 $790 but was erroneously entered in the accounting records as $970.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?
A)$180 decrease to Cash and a $180 decrease to Utility Expense
B)$180 increase to Cash and a $180 decrease to Utility Expense
C)$20 decrease to Cash and a $20 decrease to Utility Expense
D)$20 increase to Cash and a $120 decrease to Utility Expense
E)$970 increase to Cash

Question

Quizplus · Accepted Answer

The check was recorded as $970 instead of the correct amount of $790, resulting in an overstatement of $180 in the Utility Expense. To correct this, decrease the Utility Expense by $180 and increase Cash by $180.

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