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ACCA Applied Knowledge · Financial Accounting · Correction of errors

A company's trial balance did not agree, and a suspense account with a credit balance of $1,250 was opened. Later it was found that (i) a sales invoice of $3,000 was not posted to the receivables account, though the sales credit was made, and (ii) rent paid of $1,750 was debited to the rent account as $500. What is the suspense balance after correcting only (i) and (ii)?

This item is inconsistent and has no reliable answer.

  1. ADebit $500
  2. BCredit $500
  3. CNilCorrect
  4. DDebit $1,250

Explanation

Error (i): omitted receivable debit of $3,000 gives Dr receivables $3,000 and Cr suspense $3,000. Error (ii): rent debited $500 instead of $1,750 gives Dr rent $1,250 and Cr suspense $1,250 is not correct for this; the credit side was correct, so Dr rent $1,250, Cr suspense $1,250 is needed. Hold on: suspense was credit $1,250, so these journals would need debits to suspense. Original suspense credit $1,250 arose from the rent shortfall: debit short $1,250. Journal (ii) is Dr rent $1,250, Cr suspense $1,250 would worsen it, so the data are inconsistent.

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