AC 210 Lecture Notes - Lecture 20: Accounts Payable, Accounts Receivable

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Correcting Entries
Accountants must make correcting entries when they find errors. There are two ways
to make correcting entries: reverse the incorrect entry and then use a second journal
entry to record the transaction correctly, or make a single journal entry that, when
combined with the original but incorrect entry, fixes the error.
After making a credit purchase for supplies worth $50 on April 5, suppose Mr. Green
accidently credits accounts receivable instead of accounts payable.
Mr. Green discovers the error on May 2, after receiving a bill for the supplies. He may
use two entries to fix the error: one that reverses the incorrect entry by debiting
accounts receivable for $50 and crediting supplies for $50, and another that records the
transaction correctly by debiting supplies for $50 and crediting accounts payable for
$50.
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