Skip to content

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

Marlow Co sold goods on credit for $8,000 to a customer, Tan. The sale was correctly recorded in the sales account, but was wrongly debited to the account of another customer, Lim, instead of Tan. What is the correcting journal?

Debit Tan's receivables account $8,000 and credit Lim's account $8,000. This moves the debit from the wrong customer to the right one, leaving sales unchanged because the sales credit was correct.

  1. ADr Tan receivables $8,000; Cr Lim receivables $8,000Correct
  2. BDr Lim receivables $8,000; Cr Tan receivables $8,000
  3. CDr Tan receivables $8,000; Cr Sales $8,000
  4. DDr Sales $8,000; Cr Lim receivables $8,000

Explanation

Lim's account was wrongly debited, so credit Lim to remove the balance. Tan should have been debited. This is an error of commission affecting only the two receivables accounts; sales is unaffected, so options C and D would misstate sales.

Did you get it right without looking?

One question tells you little. A timed set on General ledger accounts and journal entries shows your real accuracy, how long you take and where you lose marks.

Practise General ledger accounts and journal entriesFree diagnostic mock

More General ledger accounts and journal entries questions