amount for a journal entry can be incorrect or the entry can be incorrect. Howev

Question

amount for a journal entry can be incorrect or the entry can be incorrect. However, the debits still have to equal the credits even though the entry is incorrect. If the jour- nal entry is incorrect, it can be corrected later when making adjusting/correcting journal entries. For exam- ple, if the amount is supposed to be $1,100, and for some reason the amount of $1,010 is recorded, this is acceptable -although incorrect, it can be corrected later.) The total of the debits must always equal the total of the credits for each journal entry-always. This is a funda- mental GAAP that cannot be violated. a. On January 1, 2015, a payment in cash for $12,000 is made for prepaying rent for the entire year 2015. b. On January 4, 2015, accounting services are performed and payment is received in cash for the amount of $1,900. c. On January 9, 2015, a payment in cash for advertising is made in the amount of $850. d. On January 10, 2015, office supplies are purchased in the amount of $75 with cash. e. On January 14, 2015, accounting services are performed and payment is received in cash for the amount of $2,725. f. On January 20, 2015, the telephone bill for the amount of $660 is received and paid with cash. g. On January 20, 2015, the utilities bill for $2,925 is received. The bill won't be paid until it is due on February 15, 2015. h. On January 27, 2015, accounting services are performed on account in the amount of $3,750 i. On January 28, 2015, a payment in cash for $1,500 is made for a bill from an advertising agency

Explanation / Answer

JOURNAL ENTRIES (Amount in $) Date Account Name Debit Credit a) 01-Jan-15 Prepaid Rent 12000                       - Cash 12000 Being prepaid rent for whole year   b) 04-Jan-15 Cash 1900                   - Accounting Services(Income) 1900 Being amount received in Cash for Accounting services providing c) 09-Jan-15 Advertisement Expenses 850                 - Cash 850 Being Advertisement expenses paid in Cash d) 10-Jan-15 Office supplies 75                 - Cash 75 Being Office Suplies purchased in Cash e) 14-Jan-15 Cash 2725                   - Accounting Services(Income) 2725 Being amount received in Cash for Accounting services providing f) 20-Jan-15 telephone Bill 660                - Cash 660 Being Telephone Bill paid in Cash g) 20-Jan-15 Utilities Bill 2925               - Utilities Bill Payable 2925 Being Utilities bill received, bill due date is 15-Feb-2015 h) 27-Jan-15 Accounts receivable 3750             - Accounting Services(Income) 3750 Being Accounting services provided On account i) 28-Jan-15 Advertisement Expenses 1500             - Cash 1500 Being Advertisement expenses paid in Cash

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