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The bookkeeper of Peri made the following mistakes:
Discount allowed 3840$ was credited to discounts received account.
Discount received 2960$ was debited to discounts allowed account
Discounts were otherwise correctly recorded.
Which one of the following journal entries will correct the errors?The correct answer was given
Discount allowed 880
Discount received 880
Suspense account 1760why this is so
please explain to me,Sir
The discount allowed should have been debit to discounts allowed.
So to correct it:
Dr discounts allowed 3840
Dr discounts received 3840
Cr Suspense account 7680The discount received should have been credited to discounts received.
So to correct it:
Cr Discounts allowed 2960
Cr Discounts received 2960
Dr Suspense account 5920So the net entry on each account is as follow:
Dr Discounts allowed 880 (3840 – 2960)
Dr Discounts received 880 (3840 – 2960)
Cr Suspense account 1760 (7680 – 5920)
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