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Hello.
There is this question on suspense account.
Bank interest received of 100$ has been debited to interest payable account and credited to the cash account. How should this error be corrected?
Help pls.
Been experiencing some difficulties with this chapter.Bank interest received should be debited to the Cash account and credited to Interest received account.
So to correct the mistake we need to:
Debit Cash with 200 (100 to cancel the wrong credit and 100 to put the correct debit)
Credit Interest payable with 100 (to cancel the debit that should not be there.
Credit Interest receivable (which is where it should have gone).There is no effect on the suspense account – the suspense account is only affected if the debits to not equal the credits. Here the debits did equal the credits even though they were wrong.
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