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Paula Co is reviewing its receivables ledger and has discovered the following items:
(1) An invoice for $110 had been recorded in the receivables ledger as $1,100.
(2) A credit note sent to a customer in respect of sales returns has been debited to the receivables ledger.
Indicate whether a debit or credit entry should be made in the receivables ledger in respect of each of the items.The answer in the kit is: Item 1-Credit Item 2-Debit
Now while I understood why a credit entry should be made for Item 1, I don’t get why they’re saying Debit for Item 2, shouldn’t it also be a credit entry as well? is it a mistake on their part?
I do not know where you found the question, but it is certainly a mistake and for item 2 it does need a credit entry in the receivables ledger.
A double entry posting has been completed incorrectly. Terry and Davies Ltd receivable account has been debited a sale of £2,500 when it should have been debited to Tommy and Davies Ltd’s receivable account.
How can this error be rectified, with the use of a journal system?I am confused with the answer, I want to ask that is the answer is There are no entries because the error is in subsidiary account, or the error be rectified by
Dr Tommy and Davies’s receivable 2500
Cr Terry and Davies’s receivable 2500I don’t know where you found this question, but as you have typed it then it makes no sense at all.
You have typed that it has been debited to their receivable account when it should have been debited to their receivable account. So there has been no mistake!!!
(When you refer to subsidiary accounts I can only assume that you mean accounts in the receivables ledger as opposed to the control accounts. However as I make clear in my lectures, control accounts are no longer examinable in Paper FA.)
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