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Hi Mr John ,
Question 19.1 – Task 2
a/ What does ” credited to suspense account from the cash book ” mean ?b/ Can you pls explain about the calculation of ” Proceeds ” , it is 5000-(4000 x 1.10) . why that 4.400$ needs to be substracted from 5000 ?
and where is that 5000$ from ? Is it the value of suspense account ?
Many Thanks
Mr John ,
Task 3 – Question 19.1 on BPP – I don’t understand this task
Based on task 2 , They issued 4000 share 50 shares @ $1.10 . So Dr cash 4.400 ? why does the answer shows it is ” Neither DR nor CR ” cash .
– And why does the suspense account is DR ?
I’m panic with this one . Can you pls help ?
Task 2:
a) it means that they have credited the suspense account (and debited cash).
b) The balance on the suspense account is 5,000,000. 2(a) says that 4,400,000 of it is the issue of shares. 2(b) says that the remainder is the proceeds from the sale of the plant. The remainder is 5,000,000 – 4,400,000.Task 3:
From task 2 we know that they have debited cash and credited the suspense account (as I have written in my previous reply).
They should not have credited the suspense account, they should have credited share capital and share premium accounts.
So to correct, we debit suspense and credit share capital and share premium.
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