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19 April, 21:12

Panther Company's bookkeeper debited supplies expense for the cost of goods sold during that month. The bookkeeper discovered the error prior to closing the books. The correcting entry would include

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  1. 19 April, 21:27
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    Cost of Goods Sold Dr.

    To Supplies Expense

    Explanation:

    The journal entry for cost of goods sold should've been:

    Cost of goods sold A/C Dr.

    To Purchases A/C

    (Being cost of goods sold expense recorded)

    The wrong entry passed has been:

    Supplies expenses A/C Dr.

    To Purchases A/C

    The rectifying (correcting) journal entry should be:

    Cost of Goods Sold A/c Dr.

    To Supplies Expenses A/C

    (Being rectification entry for cost of goods sold recorded)

    Cost of goods sold is an expense and expenses should be debited.

    At the same time, purchase being a nominal account, crediting it would reduce the purchases balance.

    Supplies expense was wrongly debited so it has been credited to cancel out the effect.
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