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Hi, could someone please help with the following question (question 1)
The debit side of a company’s trail balance is $1920.00 more than the credit side
Which one of the following errors would full account for the difference?
A. $960.00 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account.
B Discount recieved $960.00 has been debited to the discount allowed account.
C. A receipt of $1920.00 for commision has been ommited from the records
D. The Petty cash balance of $1920.00 has been ommited from the trial balance.
Can someone please explain why the correct answer is B. I understand that C and D would be wrong because the amounts have been ommited from the accounts.
Thanks
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In A)
Correct recording of the payment of plant maintenance expense should’ve been:Plant Maintenance Expense Acc 960 Dr.
Cashbook 960 Cr.But what was done instead:
Plant Asset Acc 960 Cr.
Cashbook 960 Cr.This would make the credit side of the trail balance greater than the debit side by $1920.
So the answer is 🙂
Correct recording of the Discount Received expense should’ve been:
Creditor’s Acc 960 Dr.
Discount Received Acc 960 Cr.But what was done instead:
Creditor’s Acc 960 Dr.
Discount Allowed 960 Dr.Now the debit side of the trail balance will be greater than the credit side by $1920.
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