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Hello Sir,
Could you please help me with the question below:
Izaz created a suspense account with a DR balance of 1250 in order to balance the trial balance . Izaz subsequently investigated and found the following errors:
1. Closing balance of the Purchase Ledger control A/c at the year end had been undercast by 160.
2. Cash received of 450 from customers has only been entered into the cash account.
3. The purchase returns day book has been overcast by 300.
What is the remaining debit balance on the suspense account after the errors have been corrected?
Ans: 1860 DR.
Sr, I was able to understand the 2nd and 3rd points. however, I’m getting a bit confused with the 1st point.
Could you please help me with understanding that point?
Thank you!
The purchase ledger control is the total payables account. If it has been undercast then it means that the credit balance is 160 lower than it should be.
Therefore to correct it, we credit purchase ledger control with 160 and debit suspense account with 160.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Thank you so much! I wasn’t aware that a purchase ledger control A/C was another name for the PLCA.
Thank you!
That is what the letters PLCA stand for 🙂
(Do watch my free lectures on Books of Prime Entry. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.)
Hi John,
Can u please explain the 3rd choice as I am unable to understand why a suspense won’t be opened for it.The purchase returns book is not part of the double entry – it is just a list.
We take the total from the book and then Dr Payables Cr Purchase Returns with the total from the book. So both the debit and the credit are wrong, but they are both of the same wrong figure and so the trial balance will still balance.
Have you watched my free lectures on Books of Prime Entry?
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