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ACCA Applied Knowledge · Financial Accounting · General ledger accounts and journal entries

Kestrel Ltd paid $1,200 cash for repairs to a delivery van, but the bookkeeper debited the van cost account (non-current asset) instead of the repairs expense account. Which journal corrects this error?

The correcting journal is debit repairs expense $1,200 and credit van cost $1,200. The cash credit was already correct, so only the debit needs moving from the asset account to the expense account.

  1. ADr Repairs expense $1,200; Cr Van cost $1,200Correct
  2. BDr Van cost $1,200; Cr Repairs expense $1,200
  3. CDr Repairs expense $1,200; Cr Cash $1,200
  4. DDr Van cost $1,200; Cr Cash $1,200

Explanation

The original entry was Dr Van cost, Cr Cash. The debit should have gone to repairs expense. The correction removes the debit from van cost (credit) and places it in repairs (debit). Option C would credit cash a second time, and option B reverses the correction.

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