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On December31,2012, ACM Co. accrued as interest revenue $8,000 that applied to2013. On that date, the company recorded a debit to interest receivable and a credit to interest revenue. which of the following entries is needed on December31,2013, to correct for this error, assuming that ACM has not closed the books for2013?:
A) Debit retained earnings by8,000 & credit interest revenue by8,000.
B) Debit retained earnings by8,000 & credit interest receivable by8,000.
C) Debit interest revenue by8,000 & credit interest receivable by8,000.
D) No journal entry is needed because the error is counterbalanced.
B) Debit retained earnings by8,000 & credit interest receivable by8,000
No journal entry is needed because the error is counterbalanced
A) Debit retained earnings by $8,000 & credit interest revenue by $8,000.
Explanation : Since the interest revenue relates to Financial year2013 and it was wrongly credited ti Interest Revenue in the year2012 that inflated the profit of2012 by $8,000.To rectify this error we need to decrease the opening balance of Retained earnings(Ending balance of 2012) and bring the interest revenue to current accounting year.
هل تحتاج لمساعدة في كتابة سيرة ذاتية تحتوي على الكلمات الدلالية التي يبحث عنها أصحاب العمل؟
