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6 April, 02:21

During the bank reconciliation process, an accountant identified an error. A check written for $20 to pay a supplier for goods purchased on credit was erroneously recorded in the company's records for $200. Which of the following entries would correct this error?

(A) Cash 180; Accounts Payable 180

(B) Cash 180; Accounts Receivable 180

(C) Account Receivable 180; Accounts Payable 180

(D) None of these, as the error should be corrected by the supplier's personnel

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  1. 6 April, 04:37
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    (A) Cash 180; Accounts Payable 180

    Explanation:

    Here, with this transaction cash actually paid is $20 whereas recorded is $200.

    Therefore in order to correct this accounts payable shall be increased by the difference $180, that is by crediting Accounts Payable by $180

    Further cash is actually $180 less than actual as per books, therefore, this shall be reversed in books, for which cash account shall be debited with $180.

    Therefore correct option is

    (A) Cash 180; Accounts Payable 180
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