Remington Company Discovered the Following Errors Made in January 2015

question 95

Essay

Remington Company discovered the following errors made in January 2015
1. A payment of salaries and wages of $1,000 was debited to Equipment and credited to Cash, both for $1,000. Remington recorded $200 of depreciation on this "equipment".
2. A collection of $3,000 from a client on account was debited to Cash $300 and credited to Service Revenue $300.
3. The purchase of supplies on account for $840 was debited to Supplies $480 and credited to Accounts Payable $480.
4. The purchase of short-term investments for $1,500 cash was debited to Prepaid Rent and credited to Cash. At year end, $500 of the "prepaid rent" was recorded as rent expense.
Instructions
(a) Correct the errors by reversing the incorrect entry and preparing the correct entry.
(b) Correct the errors without reversing the incorrect entry.

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Definitions:

Federal Tax Legislation

Laws enacted by the federal government to impose taxes on individuals and businesses to finance government activities.

Insurance Policy

A contract between an individual or entity and an insurance company, detailing the terms for premium payments in exchange for coverage of specified risk events.

Health Care

Professional services provided by individuals or institutions to promote, maintain, or restore physical and mental well-being.

Economic Theory

A set of principles and methodologies that economists use to understand, model, and predict economic behaviors and outcomes.