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11 October, 16:36

Merriweather Post Pavillion received a $820 check from a customer for the balance of accounts due. The transaction was erroneously recorded as a debit to Cash 5280 and a credit to Service Revenue $280. The correcting entry is A. debit Cash, $820, credit Accounts Receivable, $820B. debit Cash $540 and Accounts Receivable, $280, credit Service Revenue, $820C. debit Cash $540 and Service Revenue, $280, credit Accounts Receivable, $820 D. debit Accounts Receivable, $820, credit Cash, S$540 and Service Revenue, $280

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  1. 11 October, 18:52
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    C) debit Cash $540 and Service Revenue, $280, credit Accounts Receivable, $820

    Explanation:

    The correct journal entry should have been:

    Dr Cash 820

    Cr Accounts receivable 820

    But since the transaction was erroneously recorded as:

    Dr Cash 280

    Cr Sales revenue 280

    an adjusting entry is necessary for the difference:

    Dr Cash 540

    Dr Sales revenue 280

    Cr Accounts receivable 820

    This way cash account will have increased by $280 + $540 = $820, sales revenue will remain unchanged $280 - $280 = $0, and accounts receivable will decrease by $820.
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