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ACCA Applied Knowledge · Financial Accounting · Trial balance

A trial balance for Delta Co balanced. Later it was found that (1) a $900 payment of electricity was debited to the rent account, and (2) sales of $4,000 were understated in the sales account by $600 while the receivables control account was correctly debited with $4,000. Initial profit was $50,000. What is the corrected profit, assuming the electricity and rent are both expenses and error (2) caused the trial balance to be unbalanced and was balanced by a suspense account?

Corrected profit is $50,600. Misposting electricity to rent only moves cost between expense accounts, so profit is unaffected. Sales were understated by $600 because credit was $3,400 not $4,000, so correcting the sales account adds $600 to profit, clearing the suspense account.

  1. A$50,600Correct
  2. B$50,000
  3. C$49,400
  4. D$51,500

Explanation

Error (1) moves an expense between two expense accounts, so profit is unchanged. Error (2): sales were credited with $3,400 instead of $4,000, so sales are understated by $600; the suspense account holds a $600 credit to balance. Correcting it raises sales and profit by $600, giving $50,000 + $600 = $50,600.

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