Question

In: Accounting

An Accounts Payable of balance of $-70 got posted to Accounts Receivable in amount of $70...

An Accounts Payable of balance of $-70 got posted to Accounts Receivable in amount of $70 in error.

To reverse this out, do we credit is the journal entry- Credit - AR 70 and Debit AP 70?

The oringinal amount was -70 in AP but it was a positive 70 in AR.

Solutions

Expert Solution

As Given Information,

Original Amount of Accounts Payable -70 (Credit Balance ) and Accounts Receivable 70 ( Debit Balance ).

As the Question Provides, Accounts Payable of Balance $-70   got Wrongly posted into Account Receivables account of $ 70.

CONCEPT

There are many Types of Different Accounting errors. Accounting Errors are usually unintentional mistakes made when recording Journal entries.

Small Accounting Errors may not affect the final numbers in financial statements. Or they might cause major distortions in the overall figures.

These types of Error requires lots of time and resources to find and correct them. Since the accounting errors can disrupt your business, every small business should now the most common types of errors so that it's easier to find /spot and correct them.

The Common Accounting Errors may as follows :

  • Error of Commission
  • Error of Omission
  • Error of Principal
  • Compensating Errors
  • Error of Reversal
  • Rounding Errors

The One of the Above is ERROR OF REVERSAL.

  "Error Of Reversal" Means When an Entry is Debited Instead of being Credited or Vice-versa . This is Called Error of Reversal.

Example,

An Invoice of $ 100 sent to a customer is posted in Accounts payable instead of Accounts Receivable.

  CONCLUSION

  When an entry is Debited instead of being credited or Vice-versa is known as Error of Reversal. And it Should be corrected by posting a reversal Entry.

In the Given Question the "ERROR OF REVERSAL" had been occurred as the Accountant had Wrongly Posted an Account payable in Account receivable , the enrty should be reversed.

The Journal Entry Should be as follows :

JOURNAL

ACCOUNT PAYABLE ..............(DEBIT) $70

TO, ACCOUNT RECEIVABLE.............(CREDIT) $70

( BEING AMOUNT WRONGLY POSTED NOW CORRECTED)

The Final Closing Balance will be ,

Account Receivable $ 0

Account Payable $ 0

NOTES/ ASSUMPTION

IN ABOVE SOLUTION ONLY QUESTION RELATED ERRORS HAVE BEEN DEFINED.

ekkarill92 answered 1 year ago
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