7.9 Situation 6 - Correcting errors in the accounts
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The document discusses the use of the general journal for correcting errors in accounting transactions, providing examples of common mistakes, such as misallocated payments and incorrect invoice charges. It illustrates how to adjust entries with proper debits and credits to rectify these errors. Detailed examples are provided to demonstrate the correction process in various scenarios.
![© Michael Allison. Author’s permission required for external use.
7.9 SITUATION #6:
CORRECTING ERRORS IN THE ACCOUNTS
The General Journal is also used to correct errors made when entering
transactions. For example:
A payment of $80 for advertising was incorrectly debited to insurance
Advertising [E]
80
Bank [A]
80
Insurance [E]
31/1 Advertising 80
Advertising [E]
31/1 Bank 80
Bank [A]
80
Insurance [E]
80 31/1 Advertising 80](https://image.slidesharecdn.com/7-150409053950-conversion-gate01/85/7-9-Situation-6-Correcting-errors-in-the-accounts-2-320.jpg)
![© Michael Allison. Author’s permission required for external use.
Advertising [E]
80
Bank [A]
80
Insurance [E]
31/1 Advertising 80
Advertising [E]
31/1 Bank 80
Bank [A]
80
Insurance [E]
80 31/1 Advertising 80
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Advertising [E] 80
Insurance [E] 80
Correction of error (Memo 1)
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Advertising [E] 80
Insurance [E] 80
Correction of error (Memo 1)
Advertising [E]
80
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Advertising [E] 80
Insurance [E] 80
Correction of error (Memo 1)
Insurance [E]
80 80
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Advertising [E] 80
Insurance [E] 80
Correction of error (Memo 1)
7.9 SITUATION #6:
CORRECTING ERRORS IN THE ACCOUNTS](https://image.slidesharecdn.com/7-150409053950-conversion-gate01/85/7-9-Situation-6-Correcting-errors-in-the-accounts-3-320.jpg)
![© Michael Allison. Author’s permission required for external use.
The General Journal is also used to correct errors made when entering
transactions. For example:
An invoice of $40 for a credit sale was charged to B. Andrews but should
have been charged to B. Anderson
Debtor – B. Anderson [A]
40
Debtor – B. Andrews [A]
40
Debtor – B. Anderson [A]
31/1 Bank 80
Debtor – B. Andrews [A]
40 80
7.9 SITUATION #6:
CORRECTING ERRORS IN THE ACCOUNTS](https://image.slidesharecdn.com/7-150409053950-conversion-gate01/85/7-9-Situation-6-Correcting-errors-in-the-accounts-4-320.jpg)
![© Michael Allison. Author’s permission required for external use.
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Debtor – B. Anderson [A] 40
Debtor – B. Andrews 40
Correction of error (Memo 1)
Debtor – B. Anderson [A]
40
Debtor – B. Andrews [A]
40
Debtor – B. Anderson [A]
31/1 Bank 80
Debtor – B. Andrews [A]
40 80
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Debtor – B. Anderson [A] 40
Debtor – B. Andrews 40
Correction of error (Memo 1)
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Debtor – B. Anderson [A] 40
Debtor – B. Andrews [A] 40
Correction of error (Memo 1)
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Debtor – B. Anderson [A] 40
Debtor – B. Andrews [A] 40
Correction of error (Memo 1)
Debtor – B. Anderson [A]
40
Debtor – B. Andrews [A]
40 40
7.9 SITUATION #6:
CORRECTING ERRORS IN THE ACCOUNTS](https://image.slidesharecdn.com/7-150409053950-conversion-gate01/85/7-9-Situation-6-Correcting-errors-in-the-accounts-5-320.jpg)
![© Michael Allison. Author’s permission required for external use.
The General Journal is also used to correct errors made when entering
transactions. For example:
A payment of $123 for petrol was recorded in the Cash Payments Journal as
$132
Petrol [E]
123
Bank [A]
123
Petrol [E]
132
Bank [A]
40 132
7.9 SITUATION #6:
CORRECTING ERRORS IN THE ACCOUNTS](https://image.slidesharecdn.com/7-150409053950-conversion-gate01/85/7-9-Situation-6-Correcting-errors-in-the-accounts-6-320.jpg)
![© Michael Allison. Author’s permission required for external use.
7.9 SITUATION #6:
CORRECTING ERRORS IN THE ACCOUNTS
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Debtor – B. Anderson [A] 40
Debtor – B. Andrews 40
Correction of error (Memo 1)
Petrol [E]
123
Bank [A]
123
Petrol [E]
132
Bank [A]
40 132
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Bank [A] 9
Petrol [E] 9
Correction of error (Memo 1)
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Bank [A] 9
Petrol [E] 9
Correction of error (Memo 1)
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Bank [A] 9
Petrol [E] 9
Correction of error (Memo 1)
Bank [A]
9 132
Petrol [E]
132 9](https://image.slidesharecdn.com/7-150409053950-conversion-gate01/85/7-9-Situation-6-Correcting-errors-in-the-accounts-7-320.jpg)
7.9 Situation 6 - Correcting errors in the accounts
- 1. 7.9 SITUATION #6: CORRECTING ERRORS IN THE ACCOUNTS
- 2. © Michael Allison. Author’s permission required for external use. 7.9 SITUATION #6: CORRECTING ERRORS IN THE ACCOUNTS The General Journal is also used to correct errors made when entering transactions. For example: A payment of $80 for advertising was incorrectly debited to insurance Advertising [E] 80 Bank [A] 80 Insurance [E] 31/1 Advertising 80 Advertising [E] 31/1 Bank 80 Bank [A] 80 Insurance [E] 80 31/1 Advertising 80
- 3. © Michael Allison. Author’s permission required for external use. Advertising [E] 80 Bank [A] 80 Insurance [E] 31/1 Advertising 80 Advertising [E] 31/1 Bank 80 Bank [A] 80 Insurance [E] 80 31/1 Advertising 80 General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Advertising [E] 80 Insurance [E] 80 Correction of error (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Advertising [E] 80 Insurance [E] 80 Correction of error (Memo 1) Advertising [E] 80 General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Advertising [E] 80 Insurance [E] 80 Correction of error (Memo 1) Insurance [E] 80 80 General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Advertising [E] 80 Insurance [E] 80 Correction of error (Memo 1) 7.9 SITUATION #6: CORRECTING ERRORS IN THE ACCOUNTS
- 4. © Michael Allison. Author’s permission required for external use. The General Journal is also used to correct errors made when entering transactions. For example: An invoice of $40 for a credit sale was charged to B. Andrews but should have been charged to B. Anderson Debtor – B. Anderson [A] 40 Debtor – B. Andrews [A] 40 Debtor – B. Anderson [A] 31/1 Bank 80 Debtor – B. Andrews [A] 40 80 7.9 SITUATION #6: CORRECTING ERRORS IN THE ACCOUNTS
- 5. © Michael Allison. Author’s permission required for external use. General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Debtor – B. Anderson [A] 40 Debtor – B. Andrews 40 Correction of error (Memo 1) Debtor – B. Anderson [A] 40 Debtor – B. Andrews [A] 40 Debtor – B. Anderson [A] 31/1 Bank 80 Debtor – B. Andrews [A] 40 80 General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Debtor – B. Anderson [A] 40 Debtor – B. Andrews 40 Correction of error (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Debtor – B. Anderson [A] 40 Debtor – B. Andrews [A] 40 Correction of error (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Debtor – B. Anderson [A] 40 Debtor – B. Andrews [A] 40 Correction of error (Memo 1) Debtor – B. Anderson [A] 40 Debtor – B. Andrews [A] 40 40 7.9 SITUATION #6: CORRECTING ERRORS IN THE ACCOUNTS
- 6. © Michael Allison. Author’s permission required for external use. The General Journal is also used to correct errors made when entering transactions. For example: A payment of $123 for petrol was recorded in the Cash Payments Journal as $132 Petrol [E] 123 Bank [A] 123 Petrol [E] 132 Bank [A] 40 132 7.9 SITUATION #6: CORRECTING ERRORS IN THE ACCOUNTS
- 7. © Michael Allison. Author’s permission required for external use. 7.9 SITUATION #6: CORRECTING ERRORS IN THE ACCOUNTS General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Debtor – B. Anderson [A] 40 Debtor – B. Andrews 40 Correction of error (Memo 1) Petrol [E] 123 Bank [A] 123 Petrol [E] 132 Bank [A] 40 132 General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Bank [A] 9 Petrol [E] 9 Correction of error (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Bank [A] 9 Petrol [E] 9 Correction of error (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit 31 Jan Bank [A] 9 Petrol [E] 9 Correction of error (Memo 1) Bank [A] 9 132 Petrol [E] 132 9
- 8. © Michael Allison. Author’s permission required for external use. TASK In-class Homework Ex7.15 X Ex7.16 X Ex7.17 X