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Hi John,
Just wanted to say that your lectures are excellent. Many, many thanks.
I’ve been trying to understand this question and I think I now understand why they all need entry in the suspense account but what I don’t understand is why they mention – Q does not keep receivables and payables control accounts. – ? I thought the receivables and payables control accounts were part of where the double entry happens? And aren’t the trial balance numbers (dr and cr) taken from the nominal ledger?
Q’s trial balance failed to agree and a suspense account was opened for the difference. Q does not keep receivables and payables control accounts. The following errors were found in Q’s accounting records:
(1)
In recording an issue of shares at par, cash received of $333,000 was credited to the ordinary share capital account as $330,000
(2)
Cash of $2,800 paid for plant repairs was correctly accounted for in the cash book but was credited to the plant asset account
(3)
The petty cash book balance of $500 had been omitted from the trial balance
(4)
A cheque for $78,400 paid for the purchase of a motor car was debited to the motor vehicles account as $87,400Which of the errors will require an entry to the suspense account to correct them?
1 and 4 only
1, 2, 3 and 4
1, 2 and 4 only
2 and 3 onlyI will answer you, but in future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
The mention of not keeping control accounts is irrelevant to this question.
Although most companies will (and should) keep control accounts, the alternative is for the double entry for purchases and sales on credit to be directly to the individual accounts for each customer and supplier. Small companies might do this.
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