Question

A fee earned on account was journalized and posted in error as a debit to Fees Earned and a credit to Accounts Receivable. The correcting journal entry would include a__________-

Answer 1

Step 1.

Dr. Account Receivables

Cr Fees Earned

Being correction of error of fees earned wrongly debited to fees earned account

Step 2.

Dr. Account Receivables

Cr Fees Earned

Being Fees Earned on account

Step-by-step explanation:

The error must have had a double impact on the account. If an amount meant to be credited to revenue account (fees earned) was wrongly debited, then the net effect is twice the amount involved. It is basically removing two instead of adding two to the account which gives a shortfall of four.

Therefore the correction will be in 2 steps:

1. A reversal of the wrong entry

2. The Posting of the right entry

Therefore:

Step 1.

Dr. Account Receivables

Cr Fees Earned

Being correction of error of fees earned wrongly debited to fees earned account

Step 2.

Dr. Account Receivables

Cr Fees Earned

Being Fees Earned on account