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23 March, 20:18

Simpson Company purchased $900 of equipment by paying cash and recorded the expenditure as a purchase of land. The error was discovered a week later. Prepare the two journal entries required to correct the error. (First, reverse the error and then record the appropriate entry.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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  1. 23 March, 20:25
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    Given that,

    Equipment cost = $900 paid cash

    Recorded as a purchase of land, so the correct entry is required.

    The journal entries are as follows:

    (i) Cash A/c Dr. $900

    To Land A/c $900

    (To record reverse error)

    (ii) Equipment A/c Dr. $900

    To cash A/c $900

    (To record purchase equipment)
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