What is a reversal of entries error?
A reversal of entries error occurs when the debits and credits of a transaction are recorded the on the wrong sides of the ledger accounts (i.e. debits are recorded as credits and vice versa).
When a reversal of entries error has been found, it can be corrected using either one or two journals and we will illustrate both methods below.
Illustration
On 28th June, the bookkeeping of Spinning noticed that £82 of petty cash that was drawn from the bank account on 20th June was recorded in the General Ledger as follows:
| Account | Debit | Credit |
| Bank | £82 | |
| Petty cash | £82 |
The debits and credits of this transaction have been recorded the wrong way round
Correcting the error using two journals
The first journal will cancel out the effects of the incorrect entries
The second journal will record the entries that should have been made originally. You will note that the only difference between this journal and the first is the description used.
The journals will then be posted to the General Ledger accounts as shown below.
Correcting the error using one journal
Alternatively, a bookkeeper can correct a reversal of entries error using a single journal. This will use the same ledger accounts as before but we will simply double the amounts debited and credited. For the above example, the single journal would be:
The journal would then be posted to the General Ledger as follows:
Please note that in an exam students might be asked to use either of these methods to correct a reversal of entries error.
