A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is required in the company's accounts?

1. 1. debit Accounts Payable; credit Cash
   2. debit Cash; credit Accounts Receivable
   3. debit Cash; credit Accounts Payable
   4. debit Accounts Receivable; credit Cash

 

Answer:

A .

Step-by-Step explanation

The entry should be:

Accounts Payable Account     Dr.  $965

            To Cash                                               $965

But there is error of commission, this error arise when there is error in recording amounts. The entry recorded by mistake is:

Accounts Payable Account   Dr.          $695

         To Cash                                                        $695

So, company has recorded less amount in journal entry, to rectify that the company has to deduct $270 ($965 - $695) from the company's record. The entry would be:

Accounts Payable Account   Dr.    $270

            To Cash                                               $270

Hence, option B is correct.