Question

Ezzy Inc. has a new accountant named Turg Ferguson. After a hectic first week on the job, the Controller noted that Turg had made some errors in journalizing accounting transactions.   Assume that the incorrect entries have already been posted by Turg.

Required: Prepare the correcting entries to correct Turg’s errors. Omit explanations.

a) Supplies, an asset item, costing $767 were purchased and paid for. Turg debited Supplies Expense for $767 and credited Cash for $676. As his entry did not balance, he then credited Miscellaneous Revenue for $91.                                                                                                                                                         

b) The owner of the company paid a $1,000 airfare bill for a staff member going to a training convention.   Turg recorded the payment as a debit for Cash and credit to Salary expense.                                                          

  

c) The owner of the company rented a portion of unused space in its building to another local business. This tenant agreed to rent the space for $2,500 for one month and paid cash for the one month’s rent which Turg recorded as a debit to Cash and a credit to Rent Revenue. That tenant moved out at the end of month1. In month 2, a new tenant agreed to rent the space starting in month 3.   Another $2,500 was collected in month 2 from the second tenant and Turg Turg recorded the transaction in the same way the previous entry was made.                                                        

              

  

d) Turg recorded a purchase of $10,000 in Equipment as a debit to Equipment for $1,000 and a credit to Cash for $1,000. He also incorrectly recorded amortization as $100, which should have been $1,000.                    

Answer 1