At the end of June 2024, the following error was found in the general ledger of Tea Clipper Warehouse Pty Ltd. A payment of $4,000 for insurance was incorrectly debited to office administration expense.
The general journal entry to correct this mistake would be.
O Debit (DR): Insurance expense and Credit (CR): Office administration expense
O Debit (DR): Cash and Credit (CR): Office administration expense
O Debit (DR): Office administration expense and Credit (CR): Cash
O Debit (DR): Insurance expense and Credit (CR): Cash
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O Debit (DR): Office administration expense and Credit (CR): Insurance expense
The general journal entry to correct this mistake would be: O Debit (DR): Insurance expense and Credit (CR): Office administration expense
This entry transfers the incorrect posting from office administration expense to the correct account, insurance expense, while maintaining the double-entry principle. The debit increases the insurance expense account, and the credit decreases the office administration expense account.
