A cheque for £800 received from a customer was debited to the bank account but credited to sales instead of to receivables. Which journal corrects the error?
Answer and explanation
Correct answer: B. Debit sales £800, credit receivables £800
- Step 1: The bank debit was correct; the credit should have reduced receivables.
- Step 2: Sales were credited by mistake, so remove that credit by debiting sales.
- Step 3: Credit receivables £800 to record the customer's payment.
Answer
Debit sales £800, credit receivables £800.
Why not the others: Debiting receivables and crediting sales would repeat the wrong entry. Debiting bank again would record the cash twice. Crediting bank would reverse the correctly recorded cash receipt.
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