In November 2019, Yammy Fun Inc. purchased advertising for $1,000 that ran in the local November newspaper. All purchases and services are made on credit. The bookkeeper, PatrickFitz, recorded the advertising by crediting Supplies Inventory (asset) and debiting accounts payable. In 2020 (the following year), the new bookkeeper, Tua, saw this entry and asked you to help him analyze the entry. What is the correcting entry for 2020? Debit Supplies Inventory and credit Advertising Expense for 1,000. Debit Supplies Inventory and credit Retained Earnings for 1,000 Debit Retained Earnings for 1,000 and credit Accounts Payable for 1,000. Debit Advertising Expense for 1,000, debit Supplies Inventory for 1,000, and credit Accounts Payable for 2,000 Debit Retained Earnings for 1,000, debit Supplies Inventory for 1,000, and credit Accounts Payable for 2,000
In November 2019, Yammy Fun Inc. purchased advertising for $1,000 that ran in the local November newspaper. All purchases and services are made on credit. The bookkeeper, PatrickFitz, recorded the advertising by crediting Supplies Inventory (asset) and debiting accounts payable. In 2020 (the following year), the new bookkeeper, Tua, saw this entry and asked you to help him analyze the entry. What is the correcting entry for 2020?
Debit Supplies Inventory and credit Advertising Expense for 1,000.
Debit Supplies Inventory and credit
Debit Retained Earnings for 1,000 and credit Accounts Payable for 1,000.
Debit Advertising Expense for 1,000, debit Supplies Inventory for 1,000, and credit Accounts Payable for
2,000
Debit Retained Earnings for 1,000, debit Supplies Inventory for 1,000, and credit Accounts Payable for
2,000
Whenever a rectification entry needs to be passed in a subsequent accounting year for the error that occurred in a prior period, retained earnings account is adjusted to adjust the effect of accounts from the Income Summary.
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