The purchase of supplies on account was recorded and posted as a debit to Supplies for $500 and a credit to Accounts Receivable for $500. The correcting entry would include a
A) credit to Accounts Receivable for $500
B) credit to Accounts Receivable for $1,000
C) credit to Accounts Payable for $500
D) credit to Accounts Payable for $1,000

Question

Quizplus · Accepted Answer

The original entry incorrectly recorded an increase in Accounts Receivable instead of an increase in Accounts Payable. To correct this error, a credit needs to be made to Accounts Payable for the $500 that was purchased on account. Option C is the correct answer as it gives a credit to the correct account for the correct amount. Neither of the other options addresses the incorrect posting of the original entry.

The Purchase of Supplies on Account Was Recorded and Posted