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Correction of Errors

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Correction of Errors

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 17, 2014 at 10:32 pm #176910
    Yazan
    Member
    • Topics: 32
    • Replies: 32
    • ☆☆

    Hi Sir,

    I am very stuck on this question:

    The bookkeeper of Peri made the following mistakes:

    Discount allowed $3,840 was credited to Discounts Received account.
    Discount received $2,960 was debited to Discounts Allowed account.

    Discounts were otherwise correctly recorded

    Which of the following journal entries will correct the errors?

    The answer is:

    Discount allowed, dr 880
    Discount received, dr 880
    Suspense account, cr 1760.

    I do not understand why this is the case. Could you please help.

    Thanks,
    Yazan

    June 18, 2014 at 7:52 am #176943
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    The discount allowed should have been debited to the discount allowed account.
    The discount received should have been credited to the discount received account.

    So……there should be a debit on disc allowed of 3840.
    At the moment there is a debit of 2960.
    So to put it right we need to debit with 3840 – 2960 = 880.

    Also…..there should be a credit on disc received of 2960
    At the moment there is a credit of 3840
    So to put it right we need to debit with 3840 – 2960 = 880

    In both cases, the double entry is to the suspense account

    June 19, 2014 at 3:40 pm #177225
    Yazan
    Member
    • Topics: 32
    • Replies: 32
    • ☆☆

    Brilliant. All makes sense now.

    Thanks

    June 19, 2014 at 3:43 pm #177229
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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