Question

The following journal entries were prepared by an employee of International Marketing Company who does not have an adequate knowledge of accounting. GENERAL JOURNAL PAGE 3 Date Description Post. Ref. Debit Credit 2019 April 1 Accounts Payable 15,800 Fees Income 15,800 Performed services on credit 2 Cash 600 Telephone Expense 600 Paid for March telephone service, Check 1917 3 Office Equipment 8,200 Office Supplies 900 Cash 9,500 Purchased file cabinet and office supplies, Check 1918 (Assume that Office Equipment and Office Supplies were recorded at the correct values.) Required: Examine the above journal entries carefully and prepare the correcting journal entries. Analyze: After the correct journal entries have been posted, what effect do the corrections have on the company’s reported assets?

Answer 1

Answer:

April 1st

accounts receivable    15,800 debit

           accounts payable         15,800 credit

_____________________________________

telephone expense     1,200 debit

        cash                             1,200 credit

_____________________________________

cash       9,500  debit

  equipment      8,200 credit

  supplies             900 credit

-- to eliminate a wrong post---

supplies        900 debit

equipment 8,200 debit

      cash           9,500 credit

--to record the correct transaction--

___________________________________

Net effect on assets:

AR 15,800

Cash Decrease by 1,000

Explanation:

April 1st: we should use account receivable as we are going to receive cash in the future. We aren't going to pay it.

this will increase assets by 15,800 rather than decrease liabilities.

April 2nd: It should be backwards.

the effect will be a decrease in cash for 1,200 (600 to amend the mistake and 600 to show a disbursement

April 3rd we should decrease cash by 400 as the sum of the purchase is 9,100 not 9,500

As we can't you put a debit on cash we reverse the wrong entry adn do the proper one.

Real effect:

Answer 2

April 1st

accounts receivable 15,800 (D)

accounts payable 15,800 (C)

telephone expense 1,200 (D)

cash 1,200 (C)

9,500 cash (D)

equipment 8,200 (C)

supplies 900 (C)

to eliminate a wrong post

supplies 900 (D)

equipment 8,200 (D)

9,500 cash (C)

to record the correct transaction

The net effect on assets:

AR 15,800

Cash Decrease by 1,000

Further Explanation

Recording Transactions in a Journal (Journaling) - Business transactions that occur on each account will be recorded in the general ledger in accordance with the group of accounts. For example, transactions related to cash will be recorded in the cash ledger, accounts receivable transactions will be recorded in the accounts receivable ledger and so on.

In practice, the recording of business transactions is not directly recorded in the ledger but must be recorded in a journal (journalizing) first so as not to cause errors in the recording or the next accounting cycle.

In accounting, a journal is a tool used to record business transactions that are carried out chronologically by showing accounts/debits and credits and their amounts.

The journal will record the transaction and determine the opposite of the transaction so that there is a balance, for example, if there is a sale in cash, the Cash will be debited and the Sales will be credited. In essence, the amount of debt must be the same as the amount of credit.

Learn More

Journaling  https://brainly.com/question/13401367

Business Transaction  https://brainly.com/question/13401367

Details

Grade: College

Subject: Business

Keyword: journal, transaction, receivable