The owner of D'Addario Company has been doing all of the company's bookkeeping. When the accountant arrived to do the year-end adjusting entries, she found the following items:
1. A payment of salaries of $700 was debited to Equipment and credited to Cash, both for $700. 2. The investment of $2,000 of cash by the owner, Toni D'Addario, was debited to Short-Term Investments and credited to Cash, both for $2,000.
3. The collection of an account receivable of $1,000 was debited to Cash and credited to Accounts Receivable, both for $1,000.
4. The company had purchased $440 of supplies on account. This entry was correctly recorded. When the account was paid, Supplies was debited $440 and Cash was credited $440.
5. Equipment costing $3,500 was purchased on account. Equipment Expense was debited and Accounts Payable was credited, for $3,500.
Instructions
(a) Correct any errors by reversing the incorrect entry and preparing the correct entry.
(b) Correct any errors without reversing the incorrect entry?