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Ogre does not maintain separate control accounts for its receivables and payables ledger, keeping individual supplier and customer accounts in the general ledger, but posting day book totals to the various income and expense accounts.
The credit column of the computerised trial balance of Ogre exceeded the debi column by $940 and a suspense account was automatically created to record the difference together with an error report. The following errors were subsequently discovered and after these were corrected the books balanced.
1) Light and Heat of $420 accrued due at the end of the previous year had been manually reversed in the current year as a debit balance in the expense account?
May I ask what is the double entry to correct that above errors?
Thanks
The 420 will have been a credit balance on the accruals account. To reverse it they should have debited the accruals account and credited the expense account.
So there should be a credit balance on the expense account – not a debit balance.
Therefore credit expense account with 420 to remove the debit that should not be there.
Credit expense account again with 420 to create the credit that should be there.To complete the entry, debit the suspense account with 840.
Presumably there were other errors that you have not listed, to account for the overall difference of 940.
Have you watched my free lectures on accruals and on suspense accounts? The lectures are a complete free course for Paper FA and cover everything needed to pass the exam well.
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