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  1. avatar says

    Kindly help with this question

    A company made sales of $2,950 inclusive of sales tax at 18%.
    The company debited the Receivables account $2,950, credited sales $2,950 and credited the
    Sales Tax account $531.
    What corrections are required?

    A- Dr Sales $450; Dr Sales tax $81; Cr Suspense account $531
    B- Dr Sales $531; Cr Suspense account $531
    C- Dr Receivables account $450; Cr Suspense account $450
    D- Cr Sales $531; Cr Sales tax $450; Cr Suspense account $81

    • Avatar of johnmoffat says

      Ooops!

      This time the workings in the answer are correct – the sales have been credited with 450 too much and so we need to Debit sales with 450.

      The sales tax has been credited with 81 too much, and so we need to debit sales tax with 81.

      The double entry for them is to credit suspense account with 531.

      So although the workings in the answer are correct, the answer is A.

      • avatar says

        I also got answer A, although the workings are correct but the answer mentioned there in the notes is B, that got me confused. Thanks :)

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