Peter Cook, CPA, Was Asked by Carol Kane to Review

question 235

Essay

Peter Cook, CPA, was asked by Carol Kane to review the accounting records and prepare the financial statements for her upholstering shop. Peter reviewed the records and found three errors.
1. Cash paid on accounts payable for $930 was recorded as a debit to Accounts Payable $390 and a credit to Cash $390.
2. The purchase of supplies on account for $600 was debited to Equipment $600 and credited to Accounts Payable $600.
3. The company paid dividends of $1,300 and the bookkeeper debited Accounts Receivable for $130 and credited Cash $130.
Instructions
Prepare an analysis of each error showing the
(a) incorrect entry.
(b) correct entry.
(c) correcting entry.

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Definitions:

Warranty Period

The duration during which a manufacturer or seller promises to repair or replace a product if necessary, under certain conditions.

Warranty Period

The duration in which a manufacturer or seller promises to repair or replace defective products or parts at no additional cost.

Normally Distributed

A term describing a dataset that exhibits the properties of a normal distribution, specifically symmetry around the mean, with a bell-shaped curve where data tails off symmetrically at both ends.

Manufacturer

A company or entity that makes goods for sale by processing raw materials and assembling components, often on a large scale.