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Hi Sir,
I am very stuck on this question:
The bookkeeper of Peri made the following mistakes:
Discount allowed $3,840 was credited to Discounts Received account.
Discount received $2,960 was debited to Discounts Allowed account.Discounts were otherwise correctly recorded
Which of the following journal entries will correct the errors?
The answer is:
Discount allowed, dr 880
Discount received, dr 880
Suspense account, cr 1760.I do not understand why this is the case. Could you please help.
Thanks,
YazanThe discount allowed should have been debited to the discount allowed account.
The discount received should have been credited to the discount received account.So……there should be a debit on disc allowed of 3840.
At the moment there is a debit of 2960.
So to put it right we need to debit with 3840 – 2960 = 880.Also…..there should be a credit on disc received of 2960
At the moment there is a credit of 3840
So to put it right we need to debit with 3840 – 2960 = 880In both cases, the double entry is to the suspense account
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