CORRECTION OF ERROR PART 1

Shawn bought goods $1000 and paid by cash. This was recorded as DR inventory 100 CR cash in hand 100. To correct:

• DR inventory 900

  CR cash in hand 900

• DR cash in hand 900

  CR inventory 900

Owner took out goods costing $90 for own use. This was NOT recorded at all. To correct:

• DR drawings 90 CR inventory 90

• DR inventory 90

  CR drawings 90

Business paid $50 to Rahim. This was recorded in Raheem account. To correct:

• DR tp: Rahim 50 CR tp: Raheem 50

• DR tp: Raheem 50

  CR tp: Rahim 50

Business received a cheque of $100 from Weicheng. This was recorded as $110 in both accounts. To correct:

• DR cash at bank 10

  CR tr: weicheng 10

• DR tr: weicheng 10

  CR cash at bank 10

$50 paid for equipment repairs was posted to equipment account. To correct:

• DR equipment repairs 50

  CR equipment 50

• DR equipment 50

  CR equipment repairs 50

Business sold goods for $1800 to Andi. This was recorded as $180 in both accounts. To correct:

• DR tr:andi 1620

  CR sales revenue 1620

• DR sales revenue 1620

  CR tr:andi 1620

Bought goods $900 on credit from Amar. This was not recorded. To correct:

• DR inventory 900

  CR tp:amar 900

• DR tp:amar 900

  CR inventory 900

Equipment $1000 bought was recorded in inventory account. To correct:

• DR equipment 1000

  CR inventory 1000

• DR inventory 1000

  CR equipment 1000

Cash drawings of $50 was recorded as $500. To correct:

• DR drawings 450

  CR cash in hand 450

• DR cash in hand 450

  CR drawings 450

A rental income of $100 was recorded as $1100. This error causes profit to be

• OVERstated by $1000

• UNDERstated by $1000