Merriweather Post Pavillion received a $820 check from a customer for the balance of accounts due. The transaction was erroneously recorded as a debit to Cash 5280 and a credit to Service Revenue $280. The correcting entry is A. debit Cash, $820, credit Accounts Receivable, $820B. debit Cash $540 and Accounts Receivable, $280, credit Service Revenue, $820C. debit Cash $540 and Service Revenue, $280, credit Accounts Receivable, $820 D. debit Accounts Receivable, $820, credit Cash, S$540 and Service Revenue, $280

Question

Business

Jolee

23 November, 07:42

Merriweather Post Pavillion received a $820 check from a customer for the balance of accounts due. The transaction was erroneously recorded as a debit to Cash 5280 and a credit to Service Revenue $280. The correcting entry is A. debit Cash, $820, credit Accounts Receivable, $820B. debit Cash $540 and Accounts Receivable, $280, credit Service Revenue, $820C. debit Cash $540 and Service Revenue, $280, credit Accounts Receivable, $820 D. debit Accounts Receivable, $820, credit Cash, S$540 and Service Revenue, $280

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Answers (1)

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Krish · Answer 1

C) debit Cash $540 and Service Revenue, $280, credit Accounts Receivable, $820

Explanation:

The correct journal entry should have been:

Dr Cash 820

Cr Accounts receivable 820

But since the transaction was erroneously recorded as:

Dr Cash 280

Cr Sales revenue 280

an adjusting entry is necessary for the difference:

Dr Cash 540

Dr Sales revenue 280

Cr Accounts receivable 820

This way cash account will have increased by $280 + $540 = $820, sales revenue will remain unchanged $280 - $280 = $0, and accounts receivable will decrease by $820.