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Hello Sir,
I am having trouble understanding what means by ‘debit side of creditor’s a/c under cast by 600’ and the journal to correct it ‘Suspense a/c Dr ‘
To Creditors a/c Cr
Hope you would explain this to me.
Thank You.Undercast means under-added.
The journal to correct it is not as you typed – it is Dr Payables account Cr Suspense account. (And we stopped calling it creditors account many years ago!)(I do suggest that you watch our free lectures. They are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.)
Hey sir i got another question too:-
In the SOFP at 31 Dec X5 , A Co reported net receivables of $12000. During 20X6, A Co made sales on credit $125000 & received cash from customers $155500. At 31 Dec X6 , bad debts of $7100 and increased allowance for receivables by $950 to $2100. What is the net receivables figure at 31 Dec X6?
The answer is 13,450 as per book but I am getting the answer 14,400. Could you please tell me tge reason ?You must in future start in new thread when it is a different topic. The forum is to help all students which is why you must start a new thread so that everyone can see what the topic is.
You cannot possibly have copied the question correctly (or else there is a misprint in your book) because the figures you have typed are impossible.
Please check the figures again (especially opening net receivables figure, and the cash received from customers because it just does not make sense to have received more cash than the total that was owed!!) and then ask again.
Hey sir, got another question in this area.
Q:- Which type of errors are the following:-
a) The purchase of goods for resale using cash was debited to the motor vehicles a/c and credited to the cash book using the correct amount in both cases.
b)The purchase of goods for resale using cash was debited to the purchases a/c and credited to the sales day book using the correct amount in both cases.Thank You.
Have you watched our free lectures? (Because these are all explained in our lectures)
No, I just want to confirm whether my answers are right or wrong because the respective answers given for the question dont seem right. Please tell me the answers for the above questions.
Watch my free lectures and then (if you still have a problem) I will explain the answers!
The errors i mentioned in the first question are errors of principle and the correction entry for the second question is Suspence a/c Dr right?
To Sales a/c CrThe first error is an error of principle; the second error is an error of commission.
The correcting entry is DR Receivables CR Sales, with 400.
Sir, but why doesn’t the sales day book correction entry go through suspense a/c?
Because the sales day book is simply a list – it is not part of the double entry.
Again, you really should watch my free lectures on Books of Prime Entry where it is all explained.
Our lectures are a complete free course for Paper F3 and cover everything needed to pass the exam well.
Okay sir thank you very much. 🙂
I got another question in this area :-
Marlon created a suspense account with a debit balance of $1,250 in order to balance his trial balance.
He subsequently investigated and found the following errors:
(1) The closing balance of the purchase ledger control account at the current year-end has been undercast by $160
(2) Cash received of $450 from customers has only been entered into the cash account
(3) The purchase returns day book has been overcast by $300
What is the remaining debit balance on the suspense account after these errors have been corrected?
A $640
B $2,160
C $1,860
D $1,560
The correct answer option is CMy doubt is why are we making the correction entry for the first adjustment as Suspense a/c Dr Purchase a/c Credit. It should be Purchase a/c Dr Suspense a/c Cr right.
Thank you.
The opening balance on the control account will have been a credit balance (because they owe money)
Since this has been undercast by 160, we need to credit the account with 160 in order to correct it.
We will certainly not make any entry in the purchases account – that has nothing to do with it. We will credit the control account (i.e. total payables account), and therefore debit the suspense account.
Despite what I wrote in one of my earlier replies, it seems that you can not have watched my free lectures, and I do suggest that you do watch them.
They are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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