During a maternity leave of the full-time bookkeeper at a privately owned furniture repair business, a temporary employee was involved in the following transactions.

1. Work was completed on the order for one of the customers who had paid the full price in advance of $570 several months ago. At that time it was recorded as unearned revenue. The journal entry to record completing the work was a debit to Cash and a credit to Service Revenue. 2. A cheque in the amount of $1,070 was received in payment of a customers account: Accounts Receivable was debited and Cash was credited. 3. Prepaid insurance for $490 was paid by cheque. The resulting entry included a debit to Prepaid Insurance and a credit to Insurance Expense for $490. 4. 10 cartridges of printer toner were purchased on account for $580. This transaction was recorded as a debit to Equipment and a credit to Accounts Payable. None of the cartridges has been used. 5. Interest for one month on a $5,600 note payable was accrued as a debit to Interest Expense and credit to Interest Payable for $560. The annual rate of interest is 10%. 6. When the owner, L. Lowe, used $1,140 cash for personal expenses, a debit was made to L. Lowe, Capital and a credit was made to Cash. 7. Equipment costing $440 was purchased on account. This was recorded with a debit to Repairs Expense and a credit to Cash.

Correct each error by reversing the incorrect entry and then recording the correct entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit 1. Reversing incorrect entry: Prepaid Insurance Cash Repairs Expense Service Revenue Unearned Revenue Accounts Payable Interest Payable Accounts Receivable Supplies L. Lowe, Capital Insurance Expense L. Lowe, Drawings Equipment Interest Expense Interest Payable Cash Supplies Accounts Payable Insurance Expense Interest Expense Repairs Expense Service Revenue Unearned Revenue Accounts Receivable Prepaid Insurance L. Lowe, Capital L. Lowe, Drawings Equipment Correct entry: Supplies Unearned Revenue Accounts Payable Repairs Expense Accounts Receivable L. Lowe, Capital Interest Payable Insurance Expense Prepaid Insurance Service Revenue Equipment Interest Expense L. Lowe, Drawings Cash Repairs Expense Prepaid Insurance Insurance Expense Unearned Revenue L. Lowe, Drawings Interest Expense L. Lowe, Capital Accounts Payable Accounts Receivable Service Revenue Cash Equipment Supplies Interest Payable 2. Reversing incorrect entry: L. Lowe, Drawings Unearned Revenue Equipment Repairs Expense Service Revenue Accounts Receivable Cash Insurance Expense Interest Payable Prepaid Insurance Accounts Payable Supplies Interest Expense L. Lowe, Capital Supplies Unearned Revenue Accounts Payable Accounts Receivable Insurance Expense Prepaid Insurance Interest Expense Equipment Interest Payable L. Lowe, Capital L. Lowe, Drawings Repairs Expense Service Revenue Cash Correct entry: Interest Payable Insurance Expense Accounts Receivable Prepaid Insurance Repairs Expense Equipment L. Lowe, Capital Accounts Payable Unearned Revenue Supplies Interest Expense L. Lowe, Drawings Service Revenue Cash Cash Prepaid Insurance Supplies Unearned Revenue Interest Payable Insurance Expense L. Lowe, Capital Service Revenue Repairs Expense Accounts Payable L. Lowe, Drawings Accounts Receivable Equipment Interest Expense 3. Reversing incorrect entry: Accounts Receivable Interest Expense L. Lowe, Drawings Interest Payable Insurance Expense L. Lowe, Capital Prepaid Insurance Supplies Repairs Expense Service Revenue Cash Unearned Revenue Accounts Payable Equipment Unearned Revenue Service Revenue Accounts Receivable Insurance Expense Interest Expense Accounts Payable L. Lowe, Capital Prepaid Insurance Interest Payable Cash Equipment L. Lowe, Drawings Repairs Expense Supplies Correct entry: Accounts Receivable L. Lowe, Drawings Repairs Expense Prepaid Insurance Insurance Expense Equipment Supplies Interest Expense Interest Payable Cash L. Lowe, Capital Unearned Revenue Service Revenue Accounts Payable L. Lowe, Drawings L. Lowe, Capital Equipment Cash Repairs Expense Supplies Insurance Expense Accounts Payable Interest Expense Unearned Revenue Interest Payable Accounts Receivable Prepaid Insurance Service Revenue 4. Reversing incorrect entry: Prepaid Insurance Service Revenue Interest Payable Repairs Expense Accounts Receivable L. Lowe, Capital Supplies Interest Expense Insurance Expense Accounts Payable Cash Unearned Revenue Equipment L. Lowe, Drawings Interest Payable L. Lowe, Capital L. Lowe, Drawings Insurance Expense Unearned Revenue Prepaid Insurance Accounts Payable Repairs Expense Service Revenue Equipment Supplies Cash Accounts Receivable Interest Expense Correct entry: Repairs Expense Interest Expense L. Lowe, Drawings L. Lowe, Capital Service Revenue Cash Accounts Payable Supplies Accounts Receivable Unearned Revenue Insurance Expense Prepaid Insurance Equipment Interest Payable Cash Unearned Revenue Accounts Payable Equipment L. Lowe, Drawings Repairs Expense Supplies Accounts Receivable Interest Expense Insurance Expense Interest Payable L. Lowe, Capital Service Revenue Prepaid Insurance 5. Reversing incorrect entry: Unearned Revenue Prepaid Insurance Equipment Interest Expense Supplies Cash Accounts Payable Interest Payable Accounts Receivable L. Lowe, Capital Insurance Expense L. Lowe, Drawings Repairs Expense Service Revenue Service Revenue Prepaid Insurance Interest Payable Accounts Receivable Accounts Payable Insurance Expense L. Lowe, Capital Equipment Cash Unearned Revenue Supplies Interest Expense L. Lowe, Drawings Repairs Expense Correct entry: Prepaid Insurance Interest Expense Interest Payable Unearned Revenue Insurance Expense L. Lowe, Capital Accounts Payable Equipment Supplies L. Lowe, Drawings Repairs Expense Accounts Receivable Service Revenue Cash Equipment Service Revenue Insurance Expense Supplies L. Lowe, Capital Cash Unearned Revenue L. Lowe, Drawings Accounts Payable Interest Payable Accounts Receivable Prepaid Insurance Interest Expense Repairs Expense 6. Reversing incorrect entry: Service Revenue Equipment Interest Expense Interest Payable Cash Prepaid Insurance L. Lowe, Capital Repairs Expense Unearned Revenue Accounts Payable L. Lowe, Drawings Supplies Accounts Receivable Insurance Expense Cash Interest Payable Interest Expense Equipment Prepaid Insurance L. Lowe, Drawings L. Lowe, Capital Supplies Repairs Expense Service Revenue Unearned Revenue Accounts Receivable Accounts Payable Insurance Expense Correct entry: Cash Interest Payable L. Lowe, Capital Accounts Receivable Repairs Expense Insurance Expense Service Revenue Prepaid Insurance L. Lowe, Drawings Unearned Revenue Equipment Accounts Payable Supplies Interest Expense Insurance Expense L. Lowe, Drawings Supplies Prepaid Insurance Interest Expense Cash Equipment Interest Payable L. Lowe, Capital Accounts Payable Repairs Expense Unearned Revenue Service Revenue Accounts Receivable 7. Reversing incorrect entry: Accounts Receivable L. Lowe, Capital Interest Expense Supplies Insurance Expense Prepaid Insurance Accounts Payable Service Revenue Interest Payable Equipment L. Lowe, Drawings Repairs Expense Cash Unearned Revenue Cash Supplies Accounts Receivable Unearned Revenue Accounts Payable L. Lowe, Drawings Insurance Expense Prepaid Insurance Equipment Service Revenue Repairs Expense Interest Expense Interest Payable L. Lowe, Capital Correct entry: L. Lowe, Drawings Interest Payable Interest Expense L. Lowe, Capital Supplies Repairs Expense Unearned Revenue Accounts Payable Cash Service Revenue Accounts Receivable Prepaid Insurance Insurance Expense Equipment Service Revenue Cash Insurance Expense Unearned Revenue Interest Payable Accounts Payable L. Lowe, Capital Accounts Receivable Prepaid Insurance Repairs Expense Equipment Supplies Interest Expense L. Lowe, Drawings