Question

The following errors took place in journalizing and posting transactions:

a ) A withdrawal of $5,000 by Saleem, owner of the business, was recorded as a debit to Office Expense and a credit to Cash.

b) An accounts receivable payment for $7,800 was recorded as a debit to Cash and a credit to Fees Earned.

Journalize the entries to correct the errors.

Answer 1

The correct entry to record the transaction are,

Date	Accounts	Debit	Credit
A	Drawings	$ 5,000
	To office expenses		$ 5,000
B	Fees earned	$ 7,800
	To Accounts receivable		$ 7,800

Here there are two methods. Either we can reverse the entry given in the questions and record the correct entry or we can do it only one entry as done above.

SUMMARY:

Drawings account is debited and office expense is credited.

Fees earned is debited and accounts receivable is credited.