Question

Bertrand Inc. purchased some shop equipment for $5,400 in cash. By mistake, the journal entry debited...

Bertrand Inc. purchased some shop equipment for $5,400 in cash. By mistake, the journal entry debited the Office Equipment account rather than the Shop Equipment account. What correcting entry would be necessary?

Multiple Choice

  • Debit Cash $5,400; credit Shop Equipment $5,400

  • Debit Office Equipment $5,400; credit Shop Equipment $5,400

  • Debit Office Equipment $5,400; credit Cash $5,400

  • Debit Shop Equipment $5,400; credit Office Equipment $5,400

Business   Accounting   
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Answer #1

Option 4th is correct. i.e 4)Debit Shop Equipment $5,400; credit Office Equipment $5,400.

The previous entry
Office equipment 5400 Dr
Cash 5400 Cr
And the correct entry should have been
Shop equipment 5400 Dr
Cash 5400 Cr
And to correct this, the journal entry would be
Shop equipment $5400 Dr
Office equipment $54,00Cr
(cash need not be corrected as it was already credited properly)
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