Question

a fee earned on account was journalized and posted in error as a debit to fees earned and a credit to accounts receivable. the correcting journal entry would include a
a. debit to cash.
b. credit to accounts payable.
c. debit to accounts receivable.
d. debit to accounts payable.

Explanation:

1. Original Error Analysis: The original (erroneous) entry was a debit to Fees Earned and a credit to Accounts Receivable. But a fee earned on account should increase Fees Earned (credit) and increase Accounts Receivable (debit). So the error made was:

• Incorrect debit to Fees Earned (should be credit)
• Incorrect credit to Accounts Receivable (should be debit)

1. Correcting Entry Logic: To fix this, we need to reverse the incorrect entries and record the correct ones.

• Reverse the debit to Fees Earned: We do this by crediting Fees Earned (but actually, the main correction for the accounts here is about Accounts Receivable and the proper recognition). Wait, more accurately:
• The incorrect credit to Accounts Receivable (which should have been a debit) needs to be reversed. So we debit Accounts Receivable to put it back (since it was incorrectly credited, debiting it will reverse that).
• The incorrect debit to Fees Earned (which should have been a credit) needs to be reversed by crediting Fees Earned, but the question is about which of the options is part of the correcting entry.
• Let's re - express the original wrong entry:
• Wrong entry: Dr. Fees Earned, Cr. Accounts Receivable
• Correct entry should be: Dr. Accounts Receivable, Cr. Fees Earned
• To get from wrong to correct, we can do the following:
• First, reverse the wrong entry: Dr. Accounts Receivable, Cr. Fees Earned (this reverses the wrong Dr. Fees Earned and wrong Cr. Accounts Receivable)
• Then, record the correct entry: Dr. Accounts Receivable, Cr. Fees Earned (wait, no, actually the correcting entry can be made by:
• Since we debited Fees Earned incorrectly, we need to credit Fees Earned to reverse that. And since we credited Accounts Receivable incorrectly, we need to debit Accounts Receivable to reverse that. But also, we need to record the correct revenue and receivable.
• The net effect for the correcting entry: We need to debit Accounts Receivable (to correct the incorrect credit) and credit Fees Earned (to correct the incorrect debit). But looking at the options, option c is "debit to Accounts Receivable". Let's check the options:
• Option a: Debit to Cash - Cash is not involved in a fee earned on account (which is a receivable transaction), so a is wrong.
• Option b: Credit to Accounts Payable - Accounts Payable is for liabilities, not related here, so b is wrong.
• Option c: Debit to Accounts Receivable - This is correct because the original entry incorrectly credited Accounts Receivable, so we need to debit it to reverse that and record the correct receivable.
• Option d: Debit to Accounts Payable - Accounts Payable is not related, so d is wrong.

Answer:

c. debit to Accounts Receivable.