Cash of Tk 100 received at the time the service was provided was journalized and posted as a debit to Cash Tk 1,000 and a credit to Accounts Receivable Tk 1,000. The rectification journal to correct this error will be-
Answer: C) Debit Accounts Receivable 1,000 Tk, Credit Cash 900 Tk and Credit Service Revenue 100 Tk
- A) Debit Cash Tk 100, Credit Service Revenue Tk 100
- B) Debit Service Revenue Tk 1,000, Credit Tk 1,000
- C) Debit Accounts Receivable 1,000 Tk, Credit Cash 900 Tk and Credit Service Revenue 100 Tk
- D) Debit Accounts Receivable Tk 1,000, Credit Cash Tk 1,000
Explanation
Option C. The correct entry was Debit Cash 100, Credit Service Revenue 100. The wrong entry put Cash 1,000 too high and reduced Receivable by 1,000. To fix it: Debit Accounts Receivable 1,000 to restore it, Credit Cash 900 to bring cash down to 100, and Credit Service Revenue 100 to record the missing income.
Asked in: TGTDCL 2021