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Hello sir
Bookkeeper made following mistakes-
Discount allowed of 3840 was credited to discount received account.
Discount received 2960 was debited to discount allowed account.
Discounts were correctly recorded. What will be the journal entry to correct the error.
Sir the Ans is – discount allowed debit with 880 ,discount received debit with 880,suspense account credited with 1760. But how ?For the first problem, the discount allowed should have been debited to discounts allowed.
So to correct it on its own:
Debits discounts allowed with 3,840 (which is were is should have been entered)
Debit discounts received with 3,840 (to cancel the wrong credit entry)
Credit suspense account with 7,680For the second problem:
Credit discounts received with 2,960 (which is where is should have been entered)
Credit discounts allowed with 2,960 (to cancel the wrong debit entry)
Debit suspense account with 5,920If you net off all the entries, you get the following:
Discounts allowed: Debit 880 (3,840 – 2,960)
Discounts received: Debit 880 (3,840 – 2,960)
Credit suspense account: 1,760 (880 + 880)
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