ICAEW AF · Chapter 7 · Question 6 of 12
A business opened a suspense account when its trial balance did not agree. The following errors were then found, and correcting them cleared the suspense account completely: 1. Rent paid of £1,200 was correctly recorded in the cash book but debited to the rent account as £2,100. 2. Sales returns of £480 were credited to the receivables control account but not entered in the sales returns account. 3. Interest received of £2,820 was debited to the bank account but omitted from the interest income account. What was the original balance on the suspense account?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) £3,240 credit
Explanation
Corrections: (1) Credit rent £900, debit suspense £900. (2) Debit sales returns £480, credit suspense £480. (3) Credit interest income £2,820, debit suspense £2,820. Net entry to suspense = £900 - £480 + £2,820 = £3,240 debit. For this to clear the account, the original balance must have been £3,240 credit.
More Errors, suspense accounts and correcting journals MCQs
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- Q12During the current year, a company discovers a material error in the financial statements of the previous year. How does IAS 8 Accounting…