Chapter 4, Problem 4.12E

(a)

To determine

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

• To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
• To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

Correcting entries: Correcting entries are those entries which are recorded in order to rectify the effect of an erroneous entry.

To Prepare: (a) The correct entry by reversing the incorrect entry.

(b)

To determine

To Prepare: The correct entry without reversing the incorrect entry.