ACCA Applied Knowledge · Financial Accounting · Correction of errors
A trial balance did not agree and a suspense account was opened with a credit balance of $360. It was later found that cash discount received of $180 had been debited to discounts received instead of credited, with the correct entry otherwise made to the payables account. No other errors exist. What is the correcting journal for this error?
Debit suspense $360 and credit discounts received $360. A $180 discount was posted as a debit instead of a credit, so the account is misstated by twice the amount. Crediting $360 corrects it and clears the $360 credit suspense balance in full.
- ADebit Suspense $360; credit Discounts received $360Correct
- BDebit Discounts received $180; credit Suspense $180
- CDebit Suspense $180; credit Discounts received $180
- DDebit Discounts received $360; credit Suspense $360
Explanation
Discounts received should have a credit of $180 but has a debit of $180, so the account is wrong by $360. The correcting journal credits discounts received $360. The suspense debit of $360 clears the credit balance of $360 exactly. Option C only corrects $180 and leaves suspense uncleared.
Did you get it right without looking?
One question tells you little. A timed set on Correction of errors shows your real accuracy, how long you take and where you lose marks.
More Correction of errors questions
- Which of the following errors would NOT cause a suspense account to be opened?
- A company bought office furniture for $1,200 on credit. The purchase was debited to the purchases account and credited to the payables contr…
- A credit sale of $540 to customer Lopez was correctly entered in the sales account but was debited to the account of customer Lopes, another…
- Which of the following errors, when corrected, will reduce profit for the year?
- A business purchased a delivery van for $12,000 and debited the amount to the motor vehicles repairs expense account. Which type of error is…
- A trial balance totals debits of $412,300 and credits of $409,800. The difference is posted to a suspense account. Which statement about the…