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A business’s trial balance at the end of the month did not balance, with the debits exceeding credits by $500. A suspense account was opened for this amount.
Subsequently the following errors were discovered:A The sales day book was under cast by $100
B. Rent payable of $250 had been credited to the rent receivable account
C. A non-current asset with a net book value of $400 had been sold at a loss of $100.
All entries had been recorded correctly, except that the proceeds had been omitted from the disposals account.Answer
= 200 credit.
From my understanding (although I could be wrong because I teach myself from the text book):
If proceeds on disposal are omitted a credit entry in the disposals account is needed which would mean a corresponding debit in the suspense account for the other half of the transaction.
However in the answer they have credited the suspense account??
I believe I understand the reasons for the other errorsI don’t know where this question has come from – it is not from this website.
I assume that the question is wanting to know what the remaining balance is on the suspense account after correcting the errors listed. On that basis that correct answer is $700 credit.
The opening balance is $500 credit.
Error A is not relevant as far as the suspense account is concerned
To correct error B – credit the suspense account with $500
To correct error C – debit the suspense account with $300This leaves a credit balance of $700
- Topics: 17
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this question is from F3 ipass cd.
- Topics: 17
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the answer they give is
Suspense T Account:
“Debit side”
Dr sales 100
Dr rent payable 250
Dr rent receivable 250
bal c/f 200800 total
“credit side”
bal b/f 500
disposals account 300800 total
Answer = 200 credit
You will have to ask BPP then – their answer is completely wrong!
My answer above is correct 🙂
- Topics: 17
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your answer is what i got also!
you can see why its difficult for me to teach myself when answers are wrong!I cannot answer for BPP.
I think you will find that the OpenTuition answers to examples are all correct.
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