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Merriweather Post Pavillion received a $820 check from a customer for the balance due. The transaction was erroneously recorded as a debit to Cash $280 and a credit to Service Revenue $280. The correcting entry is


a. debit Cash, $820; credit Accounts Receivable, $820.


b. debit Cash, $540 and Accounts Receivable, $280; credit Service Revenue, $820.


c. debit Cash, $540 and Service Revenue, $280; credit Accounts Receivable, $820.


d. debit Accounts Receivable, $820; credit Cash, $560 and Service Revenue, $280.

Respuesta :

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Answer:

The answer is: A) debit Cash, $820; credit Accounts Receivable, $820.

Explanation:

The records should have been:

Cr Cash account 820

Dr Accounts Receivable account 820

Both accounts receivable and cash are assets;

  • when assets increase, they should be debited (the check increased cash, so cash was debited)
  • when assets decrease, they should be credited (a client paid a loan, so accounts receivable decreased)

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