An Examination of the Accounts of Freeman Company for the Month

question 193

Essay

An examination of the accounts of Freeman Company for the month of October revealed the following errors after the transactions were journalized and posted. Prepare correcting entries for each of the above assuming the erroneous entries are not reversed.
(a) A check for $700 was issued for goods previously purchased on account. The bookkeeper debited Accounts Receivable and credited Cash for $700.
(b) A check for $580 was received as payment on account. The bookkeeper debited Accounts Payable for $850 and credited Accounts Receivable for $850.
(c) When making the entry to record the year's depreciation expense, the bookkeeper debited Accumulated Depreciation for $1,500 and credited Cash for $1,500.
(d) When accruing interest on a note payable, the bookkeeper debited Interest Receivable for $200 and credited Interest Payable for $200.

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Definitions:

Marginal Revenue Product

The increased earnings from adding one more unit of a resource used in production, such as capital or labor.

Marginal Revenue Product

The extra income created from the use of one additional unit of a production resource or input.

Acres

A unit of land area used in the imperial and US customary systems, equivalent to 4,840 square yards or approximately 4,047 square meters.

Marginal Revenue Product

The extra income produced by using an additional unit of a production input, like labor or capital.