Correcting a Wrong-Side Posting in Purchases Account

Steps:

• Correct entry for purchase invoice: Debit purchases account to increase expense.
• Error: Credited purchases account, creating a credit balance instead of debit, understating net by twice the amount.
• Correction requires reversing the wrong credit (debit the amount) and recording the proper debit (add another amount).
• Net effect: Debit purchases account by twice the invoice value, increasing the balance accordingly.

Why C is correct:

• Standard accounting rule for wrong-side posting: Adjust by twice the amount to reverse the error and post correctly, restoring the debit balance.

Why the others are wrong:

• A: Decreasing ignores the need to both reverse and record the purchase.
• B: Decreasing moves balance further from the required debit side.
• D: Increasing by only the value reverses the credit but fails to record the actual purchase.

Final answer: C