Eddie Ward, CPA, was asked by Saul Crane to review the accounting records and prepare the financial statements for his upholstering shop. Eddie reviewd the records and found three errors.

1. Cash paid in accounts payable for $930 was recorded as a debit to Accounts Payable $390 and a credit to Cash $390.
2. The purchase of supplies on account for $500 was debited to Equipment $500 and credited to Accounts Payable for $500
3. Saul withdrew $1,200 of cash and the bookkeeper debited Accounts Receivable for $120 and credited Cash $120.

Instructions

Analysis of each error showing the

(a) incorrect entry.

(b) correct entry.

(c) correcting entry.