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Dear lecturer !
Could you please tell me the mistake made in this error ?
The petty cash book balance $500 had been omitted from the trial balance .
What is the journal entry to correct this error ?
The trial balance will not balance unless all of the balances are listed.
Strictly there is no double entry required (because the balance will be in the accounts correctly – it just wasn’t listed).
However because the trial balance did not balance a suspense account will have been created for the difference, and therefore you credit the suspense account.
Therefore, the journal entry to correct this error is
Dr petty cash account
Cr suspense account ?If that was the only choice available, then yes.
However we would not actually put a debit on the petty cash account because the balance is already on the account (it was just that it wasn’t listed on the trial balance) and so we don’t want to change the balance itself.
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