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The bookkeeper of Field made the following mistakes:
Discounts allowed $3,840 was credited to the discounts received account Discounts received $2,960
was debited to the discounts allowed account Which journal entry will correct the errors?
DR CR
A Discounts allowed $7,680
Discounts received $5,920
Suspense account $1,760B Discounts allowed $880
Discounts received $880
Suspense account $1,760C Discounts allowed $6,800
Discounts received $6,800D Discounts allowed $3,840
Discounts received $2,960
Suspense account $880What is the correct answer?
Firstly know what the correct entries should have been:
Dr DA Cr receivables
and
Dr Payables
Cr DRThen make t accounts of the wrong entries, and you will see that a dr of 880 to Discounts allowed and a dr of 880 to Discounts Received is needed to correct the accounts to what they should be.
That also means the suspense account entry must have been 880 x 2 = 1760 dr to compensate, so this is reversed after the corrections are made.
so
Dr DA 880
Dr DR 880
Cr Suspense 1760Answer B
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