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Hanson Company has an inexperienced accountant. During the first months on the job, the accountant made...

Hanson Company has an inexperienced accountant. During the first months on the job, the accountant made the following errors in journalizing transactions. All entries were posted as made. 1. The purchase of supplies for $650 cash was debited to Equipment $210 and credited to Cash $210.

2. A $500 dividend of cash for B. Hanson’s personal use was debited to Salaries and Wages Expense $900 and credited to Cash $900.

3. A payment on account of $820 to a creditor was debited to Accounts Payable $280 and credited to Cash $280.

Prepare the correcting entries.

Solutions

Expert Solution

Correcting Entries

Transaction

General Journal

Debit

Credit

1

Supplies

$ 650.00

             Cash

$ 440.00

             Equipment

$ 210.00

(Correcting entry made)

2

B hansons Withdrawals

$ 500.00

Cash

$ 400.00

           Salaries and wages expense

$ 900.00

(Correcting entry made)

3

Accounts payable

$ 540.00

                   Cash

$ 540.00

(Correcting entry made)

Explanation

In first entry cash was recorded less than it was suppose to. Cash needs to be credited by by 650 but instead only credited by 210 so in correcting entry cash is credited with (650-210) 440. Supplies is debited as correct entry and equipment is credited to correct wrong debit for equipment.

Second entry is for withdrawals and correction is made by crediting salaries and wages by 900 and cash debit by 400. Correct entry is made by debiting withdrawal account of owner.

In third entry amount is recorded incorrect. Correct entry is posted for difference only.

ekkarill92 answered 2 years ago
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