Wakefield Company Discovered the Following Errors Made in January 2016

question 121

Essay

Wakefield Company discovered the following errors made in January 2016.
1. A payment of salaries expense of $900 was debited to Equipment and credited to Cash both for $900.
2. A collection of $2000 from a client on account was debited to Cash $200 and credited to Service Revenue $200.
3. The purchase of equipment on account for $680 was debited to Equipment $860 and credited to Accounts Payable $860.
Instructions
Correct the errors by reversing the incorrect entry and preparing the correct entry.

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Definitions:

Property Rights

Legal rights to possess, use, and dispose of assets including tangible and intangible properties.

Deforested

Areas that have been cleared of trees and converted to non-forest use.

Extraction Cost

All costs associated with extracting a natural resource and readying it for sale.

User Cost

The opportunity cost of using a durable good, which includes the depreciation of the good and any cost associated with its use, such as maintenance.