JOURNAL

System

HI ALL OF THEM
could you tell me answer of this question

2000has been debited to the insurance account and creditied to the bank account instead of the correct amount of 200

Dr insurance 1800
cr bank 1800

i think insurance is expance so i put the debit.
is this write (or) wrong.

System

Re:JOURNAL

I think you would credit the Rent account with £1800 and debit the bank account with £1800.

Because £2000 is already in the rent account on the debit side, but it should be £200, so you need to take £1800 out by crediting the account. And vice versa in the bank a/c.

OR

You could credit insurance with £2000 and debit insurance with £200 then debit bank with £2000 and credit £200 to reverse it completely.

Gem

System

Re:JOURNAL

Gem is completely right on this. You need to correct the difference by placing it in the opposite side of the account.

Therefore you have £2000 debited to the Insurance account and it should be £200. Your difference is £1800 therefore to correct this you credit £1800 to the insurance account.

You would do the oppsite in the bank account - originally credited £2000 therefore you debit the £1800 to correct it.

Therefore your journal entry would be :
DR £1800 Bank
CR £1800 Insurance

Or the other option as Gem explained is to completely reverse the original entry and start again with the correct entry:

Original Insurance £2000 Debit, Bank £2000 Credit.
To correct Insurance £2000 Credit, Bank £2000 Debit

THEN

To start again:
Insurance would be £200 Debit and Bank £200 Credit.

Therefore your journal entry would be:

DR Bank £2000
CR Insurance £2000
DR Insurance £200
CR Bank £200

Both ways are correct but use whichever is easiest for you!!

When doing the Journal do not think of expense, asset etc, you need to think what side you would put the entry in to correct it.

I find the best way is to draw mini 't' accounts with the original entry and mark in those how you would correct them. Then this can be used to make your Journal entries.

Hope this helps!! I have finally found something I can help someone on!! Helps make a payback for all the help I have received!!

System

Re:JOURNAL

The best way to ensure an accurate audit trail is to reverse the original entry completely and then enter the correct entry. This then shows the £2000 debiting and crediting both accounts.