Question

The following are Amena Consulting June 2007 transactions:

June 1       Amena Ali, owner, invested $13,325 cash into the business

June 2       Purchased office supplies for $475 cash

June 5       Purchased $6,235 of office equipment on credit

June 7       Received $2000 cash as fees for services provided to a customer

June 10     Paid $6,235 cash to settle the payable for the office equipment purchased on June 5

June 12     Billed a customer $3,300 as fees for services provided

June 14     Paid $775 cash for monthly rent

June 20     Collected $2,300 cash toward the account receivable created above

June 30     Amena Ali withdrew $800 cash for personal use

Question # 1   

Quality Services Inc. made the following accounting errors during a recent month.

Requirement:

Prepare the necessary adjusting journal entries to correct these errors.

1. The company recorded a $450 purchase of supplies on account by debiting Supplies and crediting Accounts payable for $540.

   2. In journalizing a receipt of cash for service revenue, cash was debited for $120 instead of the correct amount of $1200. The credit was correct.

3. In recording an $800 payment on account, Accounts receivable was credited instead of cash.

   4. A $600 salary expense was posted $6000. The credit to accounts payable was correct.

Answer 1

Solution 1:

Journal Entries - Quality Services Inc.
Event	Particulars	Debit	Credit
1	Accounts payable Dr	$90.00
	To Supplies		$90.00
	(To record correcting entry for supplies)
2	Cash Dr	$1,080.00
	(Being short amount debited to cash now corrected)
3	Accounts receivables Dr	$800.00
	To Cash		$800.00
	(To record correction entry for payment on account)
4	To Salary expense		$5,400.00
	(Being excess amount debited to salary expense now corrected)