Before preparing financial statements for the current year, the chief accountant for Blossom Company discovered the following errors in the accounts. The declaration and payment of $56,000 cash dividend was recorded as a debit to Interest Expense $56,000 and a credit to Cash $56,000. 1. A 10% stock dividend (1,200 shares) was declared on the $13 par value stock when the market price per share was $18. The only entry made was Stock Dividends (Dr.) $15,600 and Dividend Payable (Cr.) $15,600. The shares have not been 2. issued. A 4-for-1 stock split involving the issue of 372,000 shares of $5 par value common stock for 93,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $1,860,000 and a credit to Common Stock $1,860,000. 3.

Correcting entry are those journal entries that are made to correct erroneous transaction that have been earlier recorded in general ledger. Errors can be corrected by reversing entry and making second journal entry or by passing single journal entry and by considering the effect of the new entry to be made.