The bookkeeper of Wilson Electric​ Supply, Inc. recorded a $ 1 comma 596 check as $ 15 comma 960 in payment of the current​ month's rent. Which of the following journal entries is needed to adjust for this error in the books of the​ company?

Question

Question content area bottom
Part 1
A.
Cash
14 comma 364
     Sales Revenue
14 comma 364
B.
Cash
14 comma 364
     Rent Expense
14 comma 364
C.
Booking Error
1 comma 596
     Cash
1 comma 596
D.
Rent Expense
15 comma 960
     Cash
15 comma 960

Answer 1

To correct the recording error made by the bookkeeper, we need to adjust the entries to reflect the correct amount of the check which is $1,596 instead of $15,960. Since the bookkeeper overstated the Rent Expense account and understated Cash, we need to decrease the Rent Expense and increase Cash to correct the error.

Here's the breakdown:

• The Rent Expense was recorded as $15,960 but should only be $1,596. Hence, the difference that needs to be adjusted is $15,960 - $1,596 = $14,364.
• We need to decrease Rent Expense by $14,364 and increase Cash by the same amount to correct the error.

Therefore, the correct journal entry would be:

B.

Cash                      14,364
        Rent Expense          14,364

This entry adjusts the Rent Expense and correctly increases Cash.