Levack Ltd. (Levack) has been having problems with its bookkeeper. Recently, errors have been found in the

Question:

Levack Ltd. (Levack) has been having problems with its bookkeeper. Recently, errors have been found in the bookkeeper’s work. Examine each of the following items and make any journal entry necessary to correct the entries originally made. This question can also be answered using an accounting equation spreadsheet.

a. Levack arranged a $175,000 bank loan. The bookkeeper debited cash and credited revenue.

b. Levack paid $15,000 rent for the next three months. The bookkeeper debited rent expense and credited cash.

c. Levack paid a dividend to shareholders of $50,000. The bookkeeper debited dividend expense and credited cash for $50,000.

d. Levack repaid $100,000 of its long-term debt. The bookkeeper debited interest expense and credited cash.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...