CORRECTION OF ERROR PART. 2

Cash purchases of $900 recorded as $990. To correct:

• DR inventory 90 CR cash in hand 90

• DR cash in hand 90 CR inventory 90

Credit purchases of $990 recorded as $900. To correct:

• DR tp CR inventory

• DR inventory CR tp

General expenses paid of $90 recorded as drawings. To correct:

• DR drawings CR general expense

• DR general expense CR drawings

Owner cash contribution not recorded at all. To correct:

• DR cash in hand CR capital

• DR capital CR cash in hand

Payment to TP:Ali recorded in Aliee account. To correct:

• DR tp ali CR tp aliee

• DR tp aliee CR tp ali

sales revenue OVERstated =

• profit OVERstated

• profit UNDERstated

General expenses OVERstated =

• profit OVERstated

• profit UNDERstated

assets OVERstated =

• profit OVERstated

• profit UNDERstated

• NO effect on profit

Drawings OVERstated =

• profit OVERstated

• profit UNDERstated

• NO effect on profits

Error in this do NOT affect

profit.

• advertising expense

• rental income

• sales returns

• capital