Errors in recording transactions Charlie Cheeryble of Cheeryble Brothers and Company called Tim Linkinwater, the company controller, into his office one day. ‘This fellow, Nickleby, we’ve hired recently as an accountant – does he know his stuff? I’ve been looking through the journal and have come across some entries he’s made that don’t look quite right to me. Here, take a look.’ The following are the entries Cheeryble has circled with his pen.

1 Dr. Cash 500 Cr. Sales revenue 500 500 cash received from Customer B in settlement of her account.

2 Dr. Cost of sales 1,400 Cr. Account payable, X 1,400 Purchase of merchandise on account at a cost of 1,400.

3 Dr. Bank loan 11,200 Cr. Cash 11,200 Payment of 10,000 principal, together with total annual interest of 1,200, on maturity of a one-year loan.

4 Dr. Bad debt expense 300 Cr. Cash 300 Write-off of 300 balance of unpaid account of bankrupt customer H.

5 Dr. Account payable, X 200 Cr. Gain on return of goods 200 Return of defective goods costing 200 to supplier, who gives full credit for them.

Cheeryble has not yet paid for them.

6 Dr. Wage expense 250 Cr. Wages payable 250 250 promised by Cheeryble to family of sick worker.

Required Help Tim Linkinwater. What is the entry that he must make in each case in order to correct any error of Nickleby’s?

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