Question

Double entry accounting 1. To reverse out an error, of 50 in accounts receivable and reclass to accounts payable do you credit A/R and Debit Account Payable? 2. if the 50 shows in AP as -50, is the entry still still debit AP? This amount is technically reducing AP so would that still debit 50?

Answer 1

Accounts receivable are assets which are debited for increase in balance and credited for decrease in balance. Accounts payable are liabilities which are debited for decrease in balance and credited for increase in balance. In order to reverse the $50 in accounts receivable and reclassify as accounts payable. This mean accounts receivable was overstated by $50 and instead of debiting accounts payable accounts receivable was debited which would increase balance of accounts receivable. In this case accounts payable being liability is debited by 50 to reduce the balance and accounts receivable being asset is credited for decrease in balance. The amount of 50 would be debited to accounts payable indicating decrease in accounts payable.