Question

When a company makes a $1,000 sale for cash, and incorrectly debits sales and credits cash for that amount. How much will total assets be off by?

Answer 1

The total assets should be off by $0.

• The journal entry for recording the sale made in cash is

Cash Dr $1,000

      To Sales $1,000

(Being sale is made in cash is recorded)

Here the cash is debited as it increased the assets and the sale is credited as the sales are also increased.

• But as per the question, the journal entry is

Sales $1,000 Dr

     To Cash $1,000

(Being sale is made in cash is recorded)

Therefore we can conclude that The total assets should be off by $0.

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