Question #1 Stewart Company has employed a bookkeeper who is inexperienced. On D

Question

Question #1 Stewart Company has employed a bookkeeper who is inexperienced. On December 29, after reviewing the records for the year, you discover the following error. On May 1, Stewart Company purchased Supplies on account, $170. The bookkeeper recorded this by debiting Supplies Expense for $710 and crediting Cash for $710 Note: Assume that it is the company's policy to record the purchase of supplies in the Supplies account. Required Prepare a correcting entry on December 29. Make sure to enter the day for each separate transaction. Date Account Title Debit Credit

Explanation / Answer

Date

Account Title

Debit

Credit

29-Dec

Supplies

$ 170.00

          Accounts Payable

$ 170.00

(Correct entry passed against may 1 wrong entry)

29-Dec

Cash

$ 710.00

       Supplies Expense

$ 710.00

(Rectifying Entry to nullify the error of entry made on may 1)

There are Four Accounts that needs to be corrected

1st Cash Account is credited in excess by $710 which is corrected by debiting it by $710.

2nd Supplies Expense is Not suppose to be Debited hence it will be Credited by $710 to make the balance of Supplies Expense equal to zero.

3rd Supplies account is required to be Debited by $170.

And 4th Accounts Payable Account is required to be Credited by $170. Supplies are Purchased on account that is why Accounts payable is credited instead of cash.   

First entry passed is the entry which is supposed to be made on May 1

Second entry is made to rectify the error made by Bookkeeper.

Date

Account Title

Debit

Credit

29-Dec

Supplies

$ 170.00

          Accounts Payable

$ 170.00

(Correct entry passed against may 1 wrong entry)

29-Dec

Cash

$ 710.00

       Supplies Expense

$ 710.00

(Rectifying Entry to nullify the error of entry made on may 1)

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