A credit balance of $120 on the account of P Hobbs in the receivables ledger arose from the overpayment of an invoice by the customer.This balance was included on the list of balance as debit balance.

Again,there are no errors in the accounting entries.This time ,a credit balance which would reduce the receivables total by $120 has been included as a debit ,increasing receivables by $120.The corrective action is therefore to reduce receivables by $240.

first,eliminate the wrong treatment where $120 were credit to the ledger: Cr receivable $120.

then do the correct entry : Cr receivable $120 to reflect the truth.

therefore, total effect is Cr receivable $ 240