If The Payment Of Cash For Rent Was Journalized And Posted In Error As A Debit To Miscellaneous Expense Instead Of Rent Expense, The Correcting Entry Will Include A Credit To Cash. True Or False
Answer Of True And False (T&F) Question With Brief Explanation
The correct journal entry, which should be recorded, for rent paid for cash includes a debit to rent expense account and a credit to cash account as shown below:
RE expense a/c XXX
Cash a/c XXX
(RE Paid For Cash During The Current Accounting Period)
As, RE account is incurring, so we debit it but cash is decreasing as it is an outflow i.e., cash, as a current asset, is going out of the business, so we credit it according to the Rules of Debit and Credit. RE account is recorded on Income Statement while cash account is recorded on the assets side under current assets section of the balance sheet.
The wrong entry recorded include a debit to Miscellaneous account instead
of rent expense account and a credit to cash account as shown below:
ME a/c XXX
Cash a/c XXX
(Wrongly Debit ME Account Instead Of RE Account)
Now, the correcting entry is record in such a way that we get the CE. So, we debit rent expense account and credit miscellaneous account as shown below:
RE a/c XXX
ME a/c XXX
(To Rectify, RE Account Debited And ME Account Credited)
In rectify entry, we need to write off ME account as it is wrongly debited instead of RE account, so to get the entry, we credit ME account and debit RE account to get the CE and it is proved by comparing wrong entry with the correcting or rectifying entry, we get the CE in which rent expense account is debited and cash account is credited.
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